A wide range of companies — from Cisco rival Juniper Networks Inc. to tech juggernaut International Business Machines Corp. — have caught investors off guard in recent weeks as corporate belt-tightening saps their growth.

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Hewlett-Packard made a big move in that direction today, announcing a series of switches that support OpenFlow, open source software that makes routers and switches programmable and thus a lot more flexible.

The news gave me an opportunity to catch up with Bethany Mayer, HP’s senior vice president and general manager for networking. We talked about HP’s plans around SDN:

AllThingsD: Bethany, put simply, what is SDN all about, as HP sees it?

Mayer: The idea is that we’re trying to create more automation, less constraint, and have the network be more abstracted so that there are few manual processes in the data center. It’s meant to bring more simplification and flexibility to the data center. In all of these products we have enabled OpenFlow. We now have 40 platforms that are OpenFlow-enabled. And we have about 20 million ports out there in the marketplace today that are OpenFlow-ready.

How is the state of HP’s networking business, generally?

Backward-looking, we now have 13 quarters of year-over-year growth under our belt. So we’ve continued to grow the business. Our SDN strategy is getting a lot of interest in the industry. I just recently spoke at the Open Networking Summit. The amount of interest has been very high. We had about 60 customers in our SDN beta, and they’re really excited about the applications we’ve created. No one else has created a security application, a load-balancing application, so things have been very good.

And how do you see the competitive landscape? HP is a distant No. 2, but a solid N0. 2 to Cisco Systems. Do you see yourself taking business away from Cisco, or is it more complicated than that?

We’ve continued to take market share in the industry over the last several quarters, and we’ve also maintained our No. 1 position as an enterprise networking vendor in China.

And HP tends to play mostly in the enterprise networking space, but you don’t play in the carrier-class and telecom networking market where Cisco tends to dominate, correct?

That’s correct, however I would say that with this virtual services router that we just announced, that offers us some inroads in the service provider market, because there are new capabilities they are looking for, something called network services virtualization, where they are trying to virtualize functions like routing and switching, security and load balancing. The capabilities that we’re bringing to the table with this announcement makes them very interested. This allows them the ability to move toward virtualizing their networks, and avoid the amounts of money they pay for their expensive proprietary switches and routers. Our focus for disrupting the networking industry is via open standards and simplification. That’s generating strong interest from the service providers. They don’t want to spend the money on the more expensive switches and routers. The point is to help these customers break the proprietary lock, help them make their networks more agile, and meet the new needs of their networks.

The company said today that it has closed a $17.1 million round of funding from its existing syndicate of investors, plus a new lead investor, Triangle Peak Partners. The round brings its total capital to $116 million raised since 2005.

It’s Vidyo’s fifth round of funding, the last being a $22 million series D led by QuestMark Partners. Networking company Juniper Networks later joined that with an undisclosed amount at the time, though a little back-of-the-envelope math suggests it was between $12 million and $14 million.

Previous investors include Menlo Ventures, Rho Ventures, Sevin Rosen Funds, Saints and Four Rivers Group.

In a statement announcing the funding, Vidyo said it saw billings increase by 68 percent year over year. This included a 77 percent surge in its health care business, and 67 percent growth in large enterprises. Since it’s private, it doesn’t disclose revenue.

Vidyo’s secret sauce is a technology called Adaptive Video Layering. Its hardware sits in a rack in the customer’s data center and constantly watches the underlying network conditions, and then adapts to meet them while video calls are under way. If there’s a lot of interference, the Vidyo system throttles up and down on the picture and sound it’s trying to deliver, based on the condition of the network. But it also adapts dynamically to the device that’s being used: It supports Apple’s iOS devices and also Google Android devices. It’s also the technology behind Google Hangout.

In a filing with the U.S. Securities and Exchange Commission dated today, Violin disclosed that it is attempting to raise as much as $50 million in new funding from existing investors. The filing is an amendment to a previous one in which it disclosed an $80 million funding round. The round now has an upper limit of $130 million, of which $96.3 million has been raised from 126 investors.

According to an investor approached to participate in the deal, but who asked not to be named, Violin has raised the funding from existing investors at an implied valuation of $850 million. The money, this investor said, would be used to fund operations until Violin completes its planned initial public offering, which now has a target date of early May.

The launch of Violin’s IPO appears to have slid several times. Last April, CEO Don Basile told AllThingsD that the offering would take place no later than Oct. 27 of last year. And as recently as last month, I heard chatter that the IPO would take place during February.

Violin was said to have filed for an IPO under the Jumpstart Our Business Startups Act, meaning the related filings with the SEC aren’t available to the public.

I called a company spokeswoman and was told the company is not commenting on financial matters.

In Violin’s last funding round, which was itself an extension of a $50 million round raised 11 months ago, GE Asset Management joined as a new investor. Other investors include Toshiba, the Japanese chip and electronics maker, and networking gear player Juniper Networks, as well as Highland Capital and SAP Ventures, the investment arm of German software giant SAP.

Sources familiar with the matter say that Violin has acquired GridIron Systems, a company that specializes in accelerating applications that run in data centers. The deal will be announced on Monday, but financial terms won’t be disclosed.

Chatter about the acquisition first emerged on the blog of Philippe Nicolas, a French expert on the storage market and head of product strategy at Scality. He wrote on Jan. 10 that GridIron had reached a deal to be acquired, but didn’t name a buyer. He estimated the purchase price at between $200 million and $300 million.

It’s Violin’s third acquisition. The last one was the assets of Gear6 in 2010, and before that, the acquisition of the original Violin Memory stream of intellectual property. Violin is taking on about 20 employees from GridIron, and will use its intellectual property in its own storage-array products. The deal brings Violin’s total headcount to about 450.

GridIron Systems was founded in 2007, and had been backed by investments from Mohr Davidow, Foundation Capital and Trinity Ventures. It had raised about $30 million in capital.

Violin was reported to have filed for an IPO in October, but did so under the Jumpstart Our Business Startups Act, so the related filings with the U.S. Securities and Exchange Commission aren’t available to the public. Last year, it raised about $80 million at an implied valuation of $800 million in a Series D round from GE Asset Management; Toshiba, the Japanese chip and electronics maker; and networking company Juniper Networks, as well as Highland Capital and SAP Ventures, the investment arm of German software giant SAP.

The folks at Juniper Networks started to wonder if the world of networking has reached some kind of fundamental inflection point. They got together with the people at Forrester Research and surveyed 150 senior IT executives to try to get a better handle on how big trends facing the enterprise, like cloud computing and big data, are affecting enterprise networks.

The findings are kind of interesting and sort of troubling. While cloud computing and software-as-a-service products such as Salesforce.com tend to save money and time by taking dedicated hardware and software out of the equation, using them puts new demands on the network: 58 percent of those surveyed said cloud services had added enough demand to their networks that they had to upgrade the networking hardware.

Cloud services tend to go hand in hand with an increased usage of mobile devices: 47 percent of businesses have seen increased demand from employees bringing their own devices to work.

The complications for networks have grown past the point where you can simply add more bandwidth and hope for the best. The survey found that 86 percent of the companies in the survey have not been unable to spin up new services or support certain business demands, because their networks were simply not up to the task. Another 74 percent reported that their networks had become complex, while 35 said their networks had become “too rigid to manage.”

So that leaves IT organizations at a point where networks are under more demand than ever, and less able to meet those demands. It can’t go on like that. “We’re reaching the point where the effectiveness of networks is inversely proportional to the volume of information they contain,” Juniper CIO Bask Iyer told me last week.

The solution is to make sure that all the bits used to build the network work together well. The old way — running networks mainly by just adding more bandwidth — won’t get the job done, Iyer says. The network has to be built with overarching business objectives in mind, with teams that are usually separate — security, manufacturing, quality control — getting more intimately involved with building the network than they have been before. Naturally, that’s the opening for a larger discussion about the implications of the research. And, of course, Juniper is holding a Web event later today to explain what it means.

The company, which over the summer landed an impressive $20 million Series A round of venture capital funding from Index Ventures and Khosla Ventures, has started to ratchet up its hiring. Sometime today, it will announce that it has hired Michael Knappe, an early pioneer in the voice-over-Internet-protocol industry and a founding member of the VoIP Forum Industry Consortium. Knappe’s title will be director of engineering.

Michael Knappe

Over that time, he was deeply involved in the VoIP Industry Forum, one of those industry-standards-setting efforts that is so often helpful in making a new technology mainstream. By the time of its peak in 1997, companies as varied as Microsoft, Intel and Cisco were all participating members, and now VoIP is indeed mainstream.

The company is certainly moving along. FuzeBox powers 60,000 hours of audio conferences every month, but more impressively, it handles 78,000 online meetings everyday. Its customers include Amazon, CBS, Thomson Reuters and Verizon Wireless — which also resells FuzeBox to its business customers.

There’s been a significant uptick in M&A and VC funding activity around this idea lately. For months I had been covering the plans of the cool start-up Nicira to try and mess up the best-laid business plans of existing networking players like Cisco Systems and Juniper Networks. Then, just as suddenly as it burst onto the scene, VMware, the company that basically defined virtualization inside servers and other computers, stepped up and acquired it for $1.3 billion.

Then a week later, software giant Oracle took out Xsigo Systems, another virtual networking concern, though we don’t know how much it paid.

Now we have a new player to talk about. It’s called Plumgrid, and today it will announce that it is taking a $10.7 million Series A round of venture capital funding from US Venture Partners and Hummer Winblad Venture Partners. Chris Rust of USVP just joined its board of directors, and Lars Leckie, a Hummer Winblad partner, is joining the board, too.

But Plumgrid is not coming out of stealth mode, at least not just yet.

I talked for awhile with Awais Nemat, (pictured) who has assembled a team of engineers from companies like Cisco, chipmaker Marvell, Sun Microsystems, VMware and even Nicira, all of them people who have contributed a lot to the concept of network virtualization and software-defined networks.

He wouldn’t tell me much about what the company is working on productwise — that’s still the stealth part. But he did tell me a bit about the kinds of problems it is aiming to solve. “There is a monumental shift coming in networking infrastructure … Networking functions that used to require a dedicated box we do in software running on standard software, running on standard silicon,” he told me.

Different kinds of companies have different kinds of networking needs, but today more often than not, all companies pick from the same set of hardware products that Cisco and Juniper and Hewlett-Packard and other networking companies offer; the primary difference has to do with whether one or the other is big enough or too big.

“We see a new kind of customer emerging, one whose demands and needs are not being satisfied by the traditional network infrastructure vendors,” Nemat said. To that end, Plumgrid is working with some early customers to define exactly what it is going to offer, essentially by defining the problems those customers have with what they can buy off the shelf today. “Empathy is turning out to be a pretty good way to design a product,” he told me.

Nemat himself is an old Cisco hand who struck out on his own to run D5 Networks, a company that designed chips for networking security. It was acquired by Marvell in 2006. He stayed on there until last year when he founded Plumgrid and raised $2 million and change in angel funding. It’s nice to have another secretive networking start-up to watch.

However, results beat the company’s estimates, helping drive shares up by almost 5 percent after hours. As of Tuesday’s close, the stock was down 27 percent so far this year.

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And while some people called to question that assertion, there’s no question that something interesting is clearly happening at Vidyo. Today it will get only more interesting.

You may remember how, in that previous story, I mentioned that Vidyo had raised a $22.5 million Series D round of funding led by QuestMark Partners, with Menlo Ventures, Rho Ventures, Star Ventures and Four Rivers Group all participating. Vidyo left that round open and now Juniper has joined it though the precise amount is not being disclosed.

Today, Vidyo says its total capital raised has reached about $97 million, and that Juniper Networks is making a strategic investment by way of its Junos Innovation Fund. While Vidyo isn’t exactly saying what the terms of the investment are, it’s pretty easy to do the math. (Earlier I had portrayed this as a $97 million Series D. Clearly I got a little confused. Sorry about that.)

The investment round will basically help Vidyo boost its go-to-market activities, but it will also give Juniper a big benefit by allowing Vidyo to integrate its videoconferencing products with Juniper’s numerous offerings. That will likely give it some new competitive plays against rival Cisco Systems, which has considerable video offerings. We’ll see how that turns out.

Video Conferencing Seen as Important and Growing Sector

Hackensack, NJ – May 22, 2012 – Vidyo, Inc., the world’s fastest-growing video conferencing company, today announced that Juniper Networks, the industry leader in network innovation, is joining as a strategic investor through its Junos® Innovation Fund, alongside lead investor QuestMark Partners and other existing investors Menlo Ventures, Rho Ventures, Star Ventures, and Four Rivers Group. Though terms of the investment were not disclosed, Vidyo has raised $97M to date to accelerate its growth. The investment from Juniper Networks enables Vidyo to increase its go-to-market activities and integrate its video conferencing products with Juniper’s numerous offerings.

According to numerous analysts, Vidyo is disrupting innovation in the video communications and collaboration market, driving the industry forward with its paradigm-shifting platform. Vidyo delivers telepresence-quality conferencing to more than 1850 enterprise, healthcare, education, and government customers. Juniper Networks is leading the charge to architecting the new network based on a unique single architecture and single operating system, Junos®, that ensures performance, reliability and security without compromise and at the scale customers demand.

“As the use of video in the enterprise and on end devices continues to expand, our customers are seeking new ways to improve video delivery,” said Jeff Lipton, vice president, Venture and Strategic Investments, Juniper Networks. “Vidyo is an emerging player that is driving innovation in software-based videoconferencing, and we believe its leading technology will improve the experience and economics of video communications alongside advances in networking technologies.”

“Juniper Networks’ strategic investment in Vidyo is a solid endorsement of our vision and a recognition of how rapidly the videoconferencing market is expected to grow in the near future; Infonetics Research states the market will reach a cumulative $22 billion over the next 5 years,” said Ofer Shapiro, Vidyo’s co-founder and CEO. “We see Juniper as a kindred spirit, itself a pioneer in its industry, having revolutionized networking for over 16 years. Their investment validates the approach we have taken to successfully create new video conferencing markets and deliver superior value, accessibility and scalability to our customers and partners. We are extremely honored that such a world-renowned leader recognizes the unique strengths and proven abilities of Vidyo that are driving the video communications industry forward.”

The Vidyo Difference

The Vidyo communication and collaboration platform is software-based, highly flexible and can be easily customized for individual enterprise and vertical market video conferencing needs. The patented VidyoRouter™ architecture introduces Adaptive Video Layering™, which dynamically optimizes the video for each endpoint leveraging H.264 Scalable Video Coding (SVC)-based compression technology and Vidyo’s IP. Adaptive Video Layering eliminates the MCU and offers unprecedented error resiliency, low latency rate matching thus enabling natural, affordable, high-quality video to work over the Internet, LTE and 4G networks. The platform allows users to quickly leverage the latest hardware innovations, new consumer devices and partner applications that utilize Vidyo’s APIs, such as the recently announced partnership with Philips and AMD in the Healthcare industry. Vidyo has been active driving H.264 SVC and SIP videoconferencing interoperability in various standards bodies since 2005.

About Vidyo, Inc.
Vidyo, Inc. pioneered Personal Telepresence enabling natural, HD multi-point videoconferences on tablets, smart phones, PCs and Macs, room systems, gateways, telepresence solutions and affordable cloud-based broadcast solutions. Headquartered in the US, with 12 additional international offices, the company has more than 225 employees and has to date raised $97M. Learn more at www.vidyo.com, on the Blog or follow @vidyo on Twitter.

The funding round includes strategic stakes from Toshiba, the Japanese chip and electronics maker; networking concern Juniper Networks; and funding from new investors, including Highland Capital and SAP Ventures, the investment arm of German software giant SAP.

Violin CEO Don Basile also told me today that the company is in the process of picking bankers that will likely lead it to an initial public offering before the end of 2012. “We had our final bake-off last week,” he told me, though he didn’t disclose who had won it.

That Violin was raising capital was disclosed in a filing with the US Securities and Exchange Commission. A formal announcement on the funding will come Monday.

Violin has been growing pretty aggressively in recent months. Basile told me that the company now has 320 employees, up from 50 in the last six months. It has been building up a global sales force with 40 people working in Europe and the Middle east. That team is run by Garry Veale, the former head of HP’s Storageworks operation in Europe. Earlier this month it hired Martin Darling, a former EMC sales exec to run its sales team in Asia.

Basile says the investment will be used press down on the gas pedal and keep growing, but also to look seriously at an IPO before the end of 2012. “The funding gives us the means to grow as a private company, but also to look at the public markets if the conditions are right,” he said. “It’s more likely than not that we’ll be a public company by the end of the calendar year.”

That’s the finding of a new research report from the networking concern Juniper Networks. Its 2011 Mobile Threats Report found that the amount of malware created for mobile devices across all operating systems more than doubled in 2011 over the previous year. Juniper said it found nearly 28,500 samples of malware, up from a little more than 11,000 in 2010. Most of them — more than 46 percent, in excess of 13,000 samples — targeted Google’s Android operating system, Juniper said. Another 41 percent targeted the older Java ME operating system.

And what kind of malware was it? Spyware, mostly — stuff designed to capture information and send it on to someone else. More than 63 percent of the malware found could track a phone’s location, collect financial information, and other stuff you’d probably rather your phone didn’t do without you knowing about it. Another 36 percent were Trojans sent via text message. These Trojans run in the background and send text messages to premium-rate numbers the attacker owns, then collect the fees generated for sending the message.

And what about Apple’s iOS? Apple’s tight control on the application ecosystem — the iTunes App store, where all applications have to be approved — has so far given it a pretty good record on security. That doesn’t mean it’s completely out of the woods, Juniper says. Apple doesn’t provide developers with the information they need to create security screening programs that run on the phone itself. That means that if, for some reason, its application-vetting process fails — let’s say some app contains an evil feature that no one notices before it’s too late — there’s no competitive set of third-party security companies providing software to help clean up the mess afterward.

In one example during 2011, a security researcher found a way to upload an unapproved app to iTunes by faking the code-signing process used for approved applications. It proved the point that a chink in Apple’s armor did exist, and Apple later issued a fix.

Juniper predicts that it’s going to get more complicated this year. While Google has started to actively scan applications on its Android Marketplace for malicious code, that only means that third-party app stores will become more attractive targets. And as certain apps become popular across many platforms — think office applications — attackers will go after those in much the same way they did popular applications on the PC. That smartphone you have in your hand may soon be a digital battlefield.

On Monday, the company is officially taking the wraps off its plans. Nicira — which I’m told is pronounced like “nice era” — aims to be the vendor of a new networking technology that’s built specifically for the age of cloud computing.

One of the most important enabling technologies of the age of the cloud is something called “virtualization”: As computers have gotten more powerful, thanks mainly to the progress of Moore’s law and ever-better chips — a single computer can, with the aid of software like that created by VMware, act like it’s 10 or 20 or 40 different computers, all at once. Each “virtual machine” has, to its user, all the properties of a physical computer, and ensures that a single machine is used in the most efficient and cost-effective way possible. Customers who use cloud services can quickly “spin up” new virtual machines as needed to meet new demands, usually within minutes.

But generally speaking, networking hasn’t kept up. The pipes through which bits pour in and out of data centers have gotten faster, but they haven’t gotten much smarter. Where cloud servers are flexible, precise and easy to manage, networks are, by comparison, blunt instruments. Meeting new demand means adding new capacity, and that usually means adding new hardware to the mix, and that usually takes weeks, if not longer.

If you’ve ever wondered if it were possible to “spin up” a virtual network as readily as you do a virtual machine, wonder no more, for that is precisely what Nicira wants to offer you, without the addition of a single new piece of hardware, but rather only some software that runs on your existing server. You don’t even need to have especially advanced networking hardware.

Its the kind of thing that could give big enterprises some new flexibility in managing their network infrastructure, particularly as need and demand peaks and drops, whether by the day or because of a seasonal change that happens just once a year.

The company already has customers: AT&T, eBay, Fidelity Investments, Rackspace and the Japanese telecom giant NTT are all using Nicira, the company says.

Nicira calls its product an NVP, or network virtualization platform, and it is being described as the sort of advance that comes along perhaps once every quarter-century. That’s a bold claim, but the argument on which the company is making it holds water. On a day-to-day basis, where you deploy an application in a data center is as much a function of how much networking capacity you have available as it is one of computing capacity.

Virtualization on servers allows you to spread a single app over as many physical machines as needed, but the network connecting those machines is what it is, and if it isn’t up to snuff, you can either enhance it by adding new routers and switches, or live with it. The result is that you can’t be as flexible with deploying apps as you’d like, and that certain machines end up being underutilized by as much as one-third, which is costly over time. You end up having to buy more servers, then pay to run them and cool them.

The Nicira NVP, as CEO Stephen Mullaney told me, “decouples” a virtual network from the physical network hardware. “All of the intelligence, all of the control, all of the services now get done in the virtual space.” The result, what was once a dumb networking pipe carrying bits into two different virtual machines running on the same one, can now be programmed to act in vastly different manners, according to rules in the virtual realm. In much the same way a single computer gets turned into a dozen, a single network can be subdivided and act like a dozen individual networks. Or the reverse: Several networks can be cobbled together to act like one. And a virtual network can be created on the fly in minutes, just like a virtual machine.

A network you can deploy in minutes saves a lot of money, because it allows you to move quickly as your networking needs change. Most big companies who demand the heaviest network loads have agreements with their service providers — usually big telecom companies — that a request for new capacity requires a week or more, because it requires the physical presence of technicians who have to install and provision new gear. But what if you can reconfigure your network in 30 seconds to meet the needs of some new application? That’s exactly what eBay’s Cloud Architect JC Martin found he could do after installing Nicira’s software on the company’s servers. EBay is a Nicira reference customer.

Other reference customers had other interesting experiences and uses to report. Japan’s NTT uses cloud data centers to run some 10,000 virtual desktops — think PCs that are all virtual machines — and found that it was easier to quickly switch between data centers during the rolling blackouts that have become the norm since that country’s earthquake last year.

There is, of course, a great deal more technical detail, but the point you have to get is that this company is out to disrupt the networking industry in a way that it hasn’t been disrupted in a long time. The traditional solution to networking problems is more, better, faster hardware, and companies like Cisco, Juniper, and Hewlett-Packard, among others, are constantly on the lookout for opportunities to sell more of that hardware.

But what if you could look a sales rep from one of those companies in the eye, and tell them that their latest million-dollar router or switch isn’t needed? Once upon a time, before the days of virtualization, if you needed a new server, you had to buy one and have it installed somewhere. Now you can, in most cases, rent space on one within minutes, or literally provision another with a few clicks of a mouse. It changed the expectation and much of the calculus of the IT industry. Many companies never buy their own servers at all, and rent space from cloud providers like Amazon, Rackspace and Joyent.

Exactly what a similar disruption might mean for networking vendors is a little hard to imagine, but if the folks at Nicira are right about the potential this technology of theirs has, it looks like that disruption is coming, one way or another.

This time the target is Cotendo, a company that uses a network of 30 data centers distributed around the world to put video content physically closer to consumers, and thus speed up delivery, especially to mobile devices. The acquirer is Internet concern Akamai, which says it will pay $268 million, plus the assumption of unvested options.

Cotendo had been reported to be the subject of a bidding war between Akamai and rival Juniper Networks. Breathless reports at the time, sourced to enthusiastic Israeli newspapers, valued Cotendo as high as $350 million. The deal will close during the first half of 2012.

Even at the lower price, the deal marks a nice exit for several U.S.-based venture capital funds. Cotendo raised $7 million from Sequoia Capital and Benchmark Capital in 2009, and then another $12 million in a round joined by Tenaya Capital last year. In June, it took a $17 million strategic investment from Juniper and Citrix Systems.

Cotendo had grown into an Akamai competitor, with a reputation for being faster at some things than Akamai, and also cheaper to boot. That made it an obvious Akamai target, given its history of acquiring rivals — usually after suing them. In 2005, it took out Speedera Networks for $130 million, after a contentious patent lawsuit between them. Akamai had sued Cotendo last November. So the next time Akamai sues someone, set your stopwatch, because the defendant may be the next one to be acquired.

Akamai’s statement on the deal is below:

Akamai to Acquire Cotendo

Combined technology and teams expected to help accelerate pace of innovation in cloud and mobile optimization

CAMBRIDGE, MA and SUNNYVALE, CA – December 22, 2011 – Akamai Technologies, Inc. and Cotendo announced today that the two companies have signed a definitive agreement for Akamai to acquire Cotendo.

Helping to mitigate the challenges of operating in a hyperconnected world, Akamai provides a secure platform over which businesses can engage users across the Web, mobile, cloud, or a mix of public and private network environments. Cotendo offers an integrated suite of Web and mobile acceleration services. The combination of the two companies’ technologies and teams is expected to increase the pace of innovation in the areas of cloud and mobile optimization.

“As we look to accelerate growth across the dynamic landscapes of cloud and mobile optimization, we are excited to be joining forces with Cotendo,” said Paul Sagan, president and CEO of Akamai. “Cotendo’s technology, partnerships and people are a strong complement to Akamai. Together, we believe there is tremendous opportunity for our combined technologies as enterprises embrace the move to the cloud and seek solutions for an increasingly mobile world.”

“The Cotendo team is very proud of our accomplishments in delivering proven and effective solutions for accelerating Web and mobile assets. By combining our innovative technology and employees with Akamai, we expect our customers and partners will gain access to a comprehensive, global platform and wider portfolio of leading-edge services supported by some of the most experienced providers in the industry,” said Ronni Zehavi, CEO and co-founder of Cotendo. “We look forward to working with Akamai in an effort to create the strongest offering in the industry.”

Founded in 2008, Cotendo is headquartered in Sunnyvale, CA, with a technology center in Israel. Cotendo currently has approximately 100 employees, with over 50 based in Israel.

Under terms of the agreement, Akamai will acquire all of the outstanding equity of Cotendo in exchange for a net cash payment of approximately $268 million, after expected purchase price adjustments, plus the assumption of outstanding unvested options to purchase Cotendo common stock. The closing of the transaction, which is subject to customary closing conditions, including regulatory approvals, is expected to occur in the first half of 2012.

According to sources close to the situation, Yahoo has hired Heidrick & Struggles for its CEO search.

It will be a dicey job, since the effort is on a separate track than the Silicon Valley Internet giant’s wide-ranging strategic review, which is looking at a range of options including the sale of the company.

That’s why many see the move as window-dressing for Yahoo’s board, rather than any real interest in hiring a new leader.

Sources said that will make the search a difficult one for Yahoo, since any CEO candidate would be coming into a very volatile situation. In addition, Yahoo has been struggling — Struggles, struggling, get it? — to recharge its advertising and search business and also its product innovation cycle.

That’s the reason — among several others — that the board of Yahoo suddenly fired its former CEO Carol Bartz last month.

Heidrick has worked for Yahoo previously, in the now ill-conceived placement of Bartz by partner John Thompson. A different partner will be handling this assignment, sources said.

The pool of possible CEOs to lead Yahoo is not a large one, but could includes execs such as Juniper Networks CEO Kevin Johnson, Chegg CEO Dan Rosensweig, Skype CEO Tony Bates, John Pleasants of Disney’s Playdom, Hulu CEO Jason Kilar, Facebook COO Sheryl Sandberg and any number of top Google execs, as well as Yahoo board member and Akamai President David Kenny.

(I am, of course, waiting by the phone for the call.)

A Yahoo spokeswoman declined to comment.

Alan Cohen, Cisco’s vice president for Enterprise and Public Sector, has agreed to join Nicira as its vice president of marketing. Cohen has more than 20 years’ experience in tech marketing and product management. He’s been on Cisco’s team since 2005, when it acquired Airespace, a maker of wireless networking switches, where he was VP of marketing. His resume includes stops at IBM, the old Baby Bell phone company US West, Tahoe Networks, Coopers & Lybrand and the U.S. Department of Energy. He’s a grad of the New York University Stern School of Business and American University.

By my count, Cohen will be the seventh person connected to Cisco in some way to join Nicira’s senior ranks. Nicira, which is backed by a $9 million investment from Andreessen Horowitz and another investment from VMware founder Diane Greene, is working on technology aimed at “virtualizing the network.” Its CEO is Steve Mullaney, a veteran networking executive who has worked at Palo Alto Networks, Shoretel and Cisco Systems. Its CTO and co-founder, Martin Casado, did his Ph.D. on the technology the company plans to bring to market. Its other founders, Nick McKeown and Scott Shenker, are electrical engineering profs at Stanford and Berkeley, respectively.

Cohen’s LinkedIn profile also says he spent nine years as a director of the real estate concern General Growth Properties. He briefly sat on the board of flash memory start-up Violin Memory until Cisco’s archrival Juniper Networks invested in that company earlier this year.

As a Cisco VP, Cohen may have been barred from being a director of a company that Juniper invested in, but now he’ll be working with some Juniper alums. In January, we reported that Nicira had hired Rob Enns, Juniper’s former VP of engineering.

That was around that time of the initial public offering of Fusion-io, the Utah-based start-up that speeds up servers and storage networks. Having opened trading at $25.30 a share on June 9, its first day of trading, its share price has held steady since, and it closed Tuesday at $28.35. It will report quarterly earnings for the first time as a public company on Thursday.

The summer is proving equally interesting for Violin Memory, another company with flash memory based technology that is intended to replace the traditional hard drive based storage arrays that allow enterprise applications like those made by Oracle to run fast. Having raised a $40 million Series C funding round from Toshiba and Juniper Networks at an implied valuation of $440 million in June, the company has been bulking up its staff.

Today Violin will announce that it has named Jonathan Goldick — the former CTO of OnStor, now a unit of chipmaker LSI — as its CTO of Software. Goldick has been knocking around the computing industry for about two decades as an expert on file systems and storage, and his resume includes stints at IBM and Microsoft.

So what does it mean to be CTO of Software at a chip company? Goldick’s job will focus on solving problems related to data management that go beyond the speeding-up that Violin’s technology offers. Once hard drives (which, for all the progress they’ve made in five decades, are still essentially platters of glass; even when spinning at the speed of sound, they are subject to errors and inefficiencies that make them still too slow for the fastest computers) are out of the picture, new problems arise.

“The early adopters, they care about speed because they’re in application hell. But once you get past that, the problem becomes one of data management,” Goldick told me. “Once you make anything 100 times faster or cheaper, you have to revisit how you manage data.”

It’s a big enough problem that Goldick was being heavily recruited by other companies working on bringing flash technology to their own hardware. Goldick wouldn’t name the companies directly, but the hints he dropped suggest he turned down offers from both EMC and Oracle.

Goldick is Violin’s second recent hire. Last month it quietly hired Garry Veale, a former vice president at Hewlett-Packard’s StorageWorks division, as its new managing director for the EMEA region.

There’s a reason that Violin is bulking up its team: The opportunity is potentially huge. Remember, if you will, the December day that Oracle CEO declared that its SPARC T3-4 Supercluster had achieved something of a land speed record of more than 30 million transactions per minute. This was the same speech in which Ellison, in one of his numerous bits of trash-talking, likened HP’s competing product to a turtle. It’s often called “the turtle speech.”

That speech got Violin CEO Don Basile all excited. One of the things that made that Oracle machine so fast was that it was packed with a couple hundred terabytes worth of flash memory. As Basile told me last week: “We loved that speech because they proved us right. It was a big validation for what we want to do.” It also means there’s no end in sight to the flash madness.

The comments from the Sunnyvale, Calif., company raised concern about second-half spending on networking products and weighed on the sector’s stocks Wednesday. Industry giant Cisco Systems Inc., which has talked about the economy’s “mixed signals” and air pockets for almost a year, fell 3.7 percent.

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In the new gig, Muglia will be in charge of Juniper’s software strategy and will report directly to Juniper CEO Kevin Johnson. Juniper sees its software business as a key differentiator from its larger but troubled rival, Cisco Systems.

“We are excited to have a leader of Bob’s caliber coming on board to lead Juniper’s software
initiatives, and I’m confident that his vision, management savvy and technical expertise will
bring tremendous value to our organization,” Juniper CEO Kevin Johnson said in a statement.
“As we continue to execute on our growth strategy centered on systems and software, we look forward to Bob playing a central role in extending our leadership position in network-powered software solutions.” Muglia’s first day at Juniper will be in October.

Muglia left Microsoft in January; he was the first of a series of senior Microsoft executives to depart during the first few months of the year. Microsoft later named Satya Nadella, who had previously run Microsoft’s Bing search engine business, to take over as head of the sever and tools business.

This also counts as the second time in recent memory that Juniper has hired a senior executive from Microsoft. The last was Brad Brooks, a former vice president at the Windows unit. Of course, Johnson, the CEO, is also a former Microsoft exec, having been president of Microsoft’s Platforms and Services Division until 2008 before taking over at Juniper. Muglia worked for him for a time.

With Muglia at the new software unit’s helm, Juniper aims to tighten its focus on systems and software as the two key areas of growth for the company.

I talked briefly with Muglia about his plans for his new job. He said that the new software solutions division will bring together software that sits on top of Juniper’s Junos operating system that runs on its networking gear to make that gear easier for companies and service providers to manage.

You don’t usually think of software as being a big part of networking equipment, but as it becomes an ever more important piece of cloud computing infrastructure, that’s changing, he said. “The reality is that the network has always had a lot of software, it’s just that it tends to be embedded in the devices so you don’t see it all that often. But applications need to have more direct control over the enterprise environment. It’s getting more important to have a strong software connection between business applications and the underlying infrastructure.”

Muglia is a 23-year Microsoft veteran — his last day there will be in early September — who joined from Rolm in 1988 and was the first product manager for SQL Server. Muglia had only been elevated to running the Server and Tools Business in 2008. It’s a $14.9 billion (fiscal 2010) business, and Microsoft’s third largest division behind the Windows/Windows Live Division and the Microsoft Business Division. On Muglia’s watch, STB sales grew more than 12 percent, and operating margins went from 31 percent to 37 percent. It was never, however, anywhere near as profitable as the other two divisions: Business Division reported operating margins of 63 percent in 2010 while Windows saw 70 percent, a fact that Microsoft CEO Steve Ballmer pointed on in his memo announcing Muglia’s departure.

The market has certainly picked a direction it likes, at least for today: Down. Cisco shares are falling again this morning, down more than 5 percent and trading at $16.85 a share after closing yesterday at $17.78.

Analysts meanwhile are interpreting Cisco’s quarterly earnings and fourth quarter guidance in every direction imaginable: Up, down and every other direction on the compass. Investors may be forgiven for feeling a little like Porky Pig: Confused.

Here’s a rundown:

BMO Capital Markets analyst Tim Long lowered his target price on Cisco from $22 to $17 a share after “weaker than expected guidance.” It doesn’t expect shares to improve until it shows that it’s growing again and that its gross margins have stabilized.

WJB Capital analyst Ted Moreau says Juniper Networks is gaining market share in the business of selling routers to service providers at Cisco’s expense.

Oppenheimer lowered its target price on Cisco to $22 from $24 on the weak guidance it gave for its fiscal fourth quarter. It’s hoping that the analyst’s meeting in September will give the stock a needed kick.

Goldman Sachs analyst Simona Jankowsky says she thinks Cisco’s share’s have bottomed out, and likes what CEO John Chambers had to say about gross margins in the switching business. She rates the stock “neutral.”

Canaccord Genuity analyst Paul Mansky cut his rating to “Hold” from “Buy” on the weak Q4 outlook, the tricky comparisons to recent quarters and declines in the core switching business. It lowered its target price to $20 from $24.

Eric Suppiger at Signal Hill says given Cisco’s current low valuation, it’s a good buy, but the troubles highlighted in yesterday’s results and guidance will continue. “While we are encouraged Cisco is taking steps to improve its focus and execution, we did not feel the earnings call gave significant comfort about growth and margin issues at Cisco,” he wrote in a note to clients. He maintained a “Buy” rating, but only as a long term play.

Shaw Wu at Sterne Agee called the results a “solid quarter,” and rates Cisco a “Buy” with a target of $29. In a note to clients he wrote that Cisco’s Q4 guidance was “more conservative than expected,” and that “while this is a set-back, we believe Cisco did the prudent thing in setting more reasonable expectations amid its restructuring and product transitions. Based on channel feedback, we believe its guidance could turn out conservative.” Cisco’s story, he says, is “getting better and we’d rather be a buyer at these depressed levels than wait for obvious evidence of improvement.”

Brian Marshall of Gleacher and Co. compared Cisco to “a tanker ship that will require multiple quarters to fix its long-term financial model.” He maintained his “neutral” rating and lowered his price target to $17 from $18. He calls Cisco’s current low price “intriguing” but worries about the numerous structural problems including its loss of market share, the saturation of its market, erosion of gross margins, and its moves away from its core business.

Brent Bracelin of Pacific Crest Securities goes in multiple directions at once: While arguing that Cisco’s shares are “compelling for value investors, given their low price,” he lowered his price target from $25 to $22. Like I said: That-a-way.

Meanwhile CEO John Chambers appeared on CNBC Asia overnight (video below) re-iterating the story he told analysts on a conference call yesterday. He acknowledges the weaknesses in Cisco’s switching and public sector business, and said the restructuring to get Cisco back on track is underway. It has been, and will continue to divest itself of under-performing units like the Flip Video division it unceremoniously killed last month and telegraphed that more cuts are on the way.

The company also confirmed that layoffs are coming. Some employees will get the option to take early retirement; the expense related to that could be as high as $1 billion. Others will lose their jobs, though as yet there are no indications of the number of jobs that will be affected nor any hints regarding what business units will be affected. We do know that Cisco is moving fast–Chambers repeated that several times on the call and in his CNBC appearance–and so it seems we’ll know more before July, when Cisco’s fiscal year 2012 gets underway. Bet on more Wackyland-like confusion until then.

According to an internal memo from Juniper Networks, which you can see below, one of its top tech execs, David Yen (pictured here), is departing immediately.

Sources said Yen is headed to Cisco to run its servers business, but the networking giant has not returned a request for comment.

Yen had most recently been EVP and GM of Juniper’s fabric and switching technologies unit. He joined Juniper in 2008 as EVP of emerging technologies.

But Yen was better known for his previous 20-year stint at Sun Microsystems. His last job there was running its chip division.

The impetus for Yen’s departure might have been the formation of the Platform Systems Group, run by Stefan Dyckerhoff, which is prominently mentioned in the memo from Juniper CEO Kevin Johnson. Dyckerhoff was elevated to the job in late January.

Sources said Yen did not get that job and was unhappy with the move.

But read into it yourself:

Team Juniper:

In February, we announced the evolution of our business groups to better position us to focus on two core business models: Systems and Software.

A key element of that strategy was the formation of the Platform Systems Group (PSG) under the leadership of Stefan Dyckerhoff. The mission of PSG is to optimize systems and silicon development across the full range of Junos-based platforms to accelerate our growth.

As part of the next phase of PSG’s growth, R.K. Anand, who leads QFabric development and our Data Center Business Unit (DCBU) and Alex Gray, who leads our Campus and Branch Business Unit (CBBU), will join PSG and report directly to Stefan. This move positions us to drive a fully integrated approach to our end-to-end systems strategy, as we continue to leverage the synergies across our breakthrough innovations in the core, the edge, the data center, and the campus and branch environment. Under Stefan’s leadership, PSG is now positioned to drive the go-to-market focus we have around domain-focused solutions that incorporate systems products from across PSG.

As part of this transition, David Yen is leaving Juniper effective immediately. David has a desire to return to his roots in servers that he gained during his nearly 20-year career at Sun Microsystems. We appreciate David’s contributions.

We are successfully accelerating momentum and adoption of our systems offerings. The response to both our QFabric data center architecture and to the Converged Supercore–two disruptive innovations unveiled in the quarter–has been overwhelmingly positive. These two offerings represent the best of Juniper innovation in systems, software and silicon.

As demonstrated by our strong performance over the past year, we continue to execute on our multi-year growth agenda, driven by our innovation roadmap. The new network is here, and we are delivering on our vision to capture the opportunity before us. Together with our partners, we will transform the economics and experience of networking for our customers.

Thank you for your hard work and dedication. I look forward sharing in Juniper’s continued success with you.

Regards,

Kevin Johnson

One of the results of Yahoo’s weak earnings report earlier this week has been the renewal of chatter about possible changes in its leadership and even ownership.

And continued investor discomfort with its troubled stock price–Yahoo shares are down 7.25 percent year over year and an astonishing 49 percent on a five-year basis–and the level of renewed grumbling by major institutional shareholders is causing some key players to go back to their PowerPoints to reevaluate various options.

(By way of contrast, Google is down about 4.5 percent year over year–largely due to last week’s earnings release with higher than expected expenses–but still up more than 20 percent for the five years.)

As many might recall, last year Yahoo was under scrutiny by a number of interested parties–from big media companies to other digital players to private equity firms–considering a number of takeover scenarios.

Most of them were just talk and no action resulted, but that did not mean that interest went away.

The truth is, they are still out there and ruminating–this time with what sources describe as a much more amenable Yahoo board, with several of its key members willing to entertain any legitimate offers or ideas to improve the Silicon Valley search giant’s prospects.

In the last go-round, by contrast, Yahoo’s top execs–including CEO Carol Bartz–denied any interest in the swirl of rumors related to a variety of ideas.

That’s definitely changed–at least at the board level–so here are three very credible scenarios of what could happen:

Peetie, Peetie, Yahoo-Sweetie

Late last year, BoomTown wrote a post about the interest that former News Corp. COO and President Peter Chernin–who now owns his own entertainment production company–had in the situation at Yahoo.

As I wrote in November:

But multiple sources from a variety of sides said that Chernin, a well-liked and deeply experienced media and entertainment exec, has been contacted by a number of private equity firms and other investors about his interest in becoming involved should any of the various and sundry scenarios around the Internet giant pan out.

And Chernin, many sources said, has expressed a definite interest in the situation, perhaps because he was deeply involved in a previous deal when running News Corp.

At the time, it involved combining the media giant’s Myspace social networking site with Yahoo and also Microsoft’s portal MSN and creating a new company, code-named “TrafficCo.”

Indeed, that interest remains for Chernin, who has also been an increasingly active investor, including in the digital sector. He is an angel funder of the hot social media app start-up Flipboard, and also just joined the board of the popular Pandora music service.

The most likely possible scenarios have him joining with deep-pocketed partners, including Providence Equity Partners and, yes, Microsoft, as well as investment banks or advisory firms, such as Morgan Stanley and Code Advisors.

The approach being considered–which would only be done in a friendly way, with the cooperation of Yahoo’s board–would center on making a large enough investment in its shares, allowing the group to take control of the management and the board, putting Chernin in as chairman and maybe CEO (or with a new CEO–see next section).

If Microsoft were involved–and Chernin has strong ties there–such a scenario might include folding all its online properties into Yahoo and renegotiating its rocky search partnership, too.

This is an idea that intrigues a lot of people–including current Yahoo board chairman Roy Bostock, co-founder Jerry Yang and other board members–who have indicated recently to several investors and dealmakers a willingness to listen to credible player such as Chernin.

But, in this scenario, it would be up to Chernin and his partners to make a prosposal, said sources, and he might decide that the complexity of getting the power to make big changes at Yahoo is too big to tackle.

In addition, Chernin remains a successful Hollywood player, with several major television and movie projects in the works, as well as big investment possibilities in Asia.

“Does he want the headache of Yahoo at this point in his career?” asked one person, among many Chernin has talked to recently about becoming involved in the company. “Would you?”

Maybe so, if it would provide a big financial windfall. Many think an exec with a reputation like Chernin’s could easily begin to move Yahoo’s moribund stock upward quickly.

ABC (Anybody But Carol)

Here’s one truth: Yahoo CEO Carol Bartz does not get proper credit for a number of moves she has made since coming to the company two years ago, including cleaning up the messy corporate structure, de-complexifying garbled systems, cutting costs and bringing its far-flung operations into line.

Yahoo’s stock is certainly doing better than when she arrived in early January of 2009, when it was in the $12 range compared to its current $16 price point.

But here’s another: That stock price now includes more than $10 in solid assets–cash and Yahoo’s much more valuable stakes in China’s Alibaba Group and Yahoo! Japan–leaving very little true share appreciation.

And here are more truths: Bartz’s inability to get revenues growing, innovations flowing, promising start-ups acquired and–most importantly–to stop the continual exodus of talent out the door of Yahoo has made her tenure shakier than ever.

Add to that making its relationships with Asian partners more tense, almost no traction in key mobile, video and social arenas, a record of loud public declarations that have fallen flat and serious troubles in Yahoo’s search and online partnership with Microsoft–a deal Bartz struck and is charged with managing–recently highlighted in Yahoo’s earnings earlier this week.

As shareholder activist Eric Jackson, who has long agitated for change at Yahoo, wrote this week in a post:

“The truth is that investors are fed up with Bartz. Their enmity towards Bartz is palpable when you talk to them. Bartz talked a big game coming into the job and she hasn’t delivered. It’s that simple.”

Well, not that simple and maybe not fair, but it’s also clear that no one thinks Bartz will be re-upped when her contract is up in 18 months.

Thus, it’s no surprise that ideas of other possible leaders of Yahoo are being contemplated now.

Here’s the short list I have made of my choices: Akamai President and Yahoo board member David Kenny; former Microsoft exec and current Juniper Networks CEO Kevin Johnson; former AOL CEO and current News Corp. digital head Jon Miller; and Nikesh Arora, current Chief Business Officer and sales head at Google.

There are plenty more to pick from, of course, and any could be installed in conjunction with an effort such as Chernin’s.

AOL Under the Hoop

No good Yahoo scenario plotting can be contemplated without including AOL and its flashy CEO Tim Armstrong.

Armstrong has made no secret of wanting to get ahold of Yahoo properties to apply the strategy he has been trying at AOL to get it moving again.

Which is: To become the premiere digital media company.

Which is actually Yahoo’s new motto–although arguably, in word and deed, Armstrong has been much more active in pushing the concept and narrative.

That includes his incessant acquisitions of all kinds of online media properties, including the big fish–the $315 million purchase of the Huffington Post and the coronation of its even-flashier co-founder Arianna Huffington as content chief.

Armstrong has certainly not been averse to the idea of a Yahoo-AOL hookup with him at the top, and has been actively talking to anyone interested in such a deal.

And things could get a lot more interesting if AOL linked with a bigger strategic partner, such as News Corp. or Disney or even Google, Armstrong’s former stomping grounds.

Still, wishing does not make it so, especially with a much smaller and weaker set of assets than Yahoo and a still poor record on goosing its advertising sales.

AOL’s stock is down 30 percent year over year, as investors still worry about Armstrong’s ability to turn the company around, which kind of puts him in the same situation as Bartz.

“AOL is waiting under the hoop for whatever happens, which is a good place to be,” said one person close to the situation. “Why not?”

Why not, indeed–so, let the games begin.