Cisco moves into optical technology.

Cisco Systems Inc. will announce today agreements to buy the stakes it doesn_t already own in Cerent Corp. and Monterey Networks Inc. for about $7.4 billion in stock. The moves, which include the company_s biggest acquisition ever, underline the importance of optical technology in the networks of the future. Analysts say the technology, which harnesses light to carry data across thin strands of glass, will increasingly be chosen to build networks as Internet use explodes and the world_s appetite for higher transmission speeds grows correspondingly. The planned purchases mark the 39th and 40th acquisitions by San Jose-based Cisco in a relentless expansion strategy that began in late 1993. Its largest acquisition previously was of StrataCom Inc. in 1996 for about $4 billion in stock. Though it started out making devices to connect computer networks, Cisco is now competing with much larger, established telecommunications companies such as Lucent Technologies Inc. and Nortel Networks Inc. to win business from phone companies and Internet service providers. The telecommunications companies, meanwhile, are making their own acquisitions of computer-networking firms and other companies that supply the technology that allow voice, video and data traffic to travel on a single network. Cerent, of Petaluma, sells so-called multiplexers, which can be used to aggregate traffic from various other types of networks and move it onto optical networks. Monterey Networks, which moved from Silicon Valley to Richardson, Texas, earlier this year, is developing wavelength routers. These can be used to establish connections in an optical network, providing paths for traffic to travel rapidly across the entire network.Fiber-optic technology is becoming popular because light traveling over stands of glass moves faster than electricity over copper and doesn_t degrade over long distances. Companies with their roots in telecommunications, such as Lucent and Nortel, already have optical products, and with these acquisitions Cisco is seeking to close the gap.Cisco already owns stakes of 8.2 percent in Cerent and 9 percent in Monterey. Both are privately held. The boards of both companies have approved the planned acquisitions by Cisco, but the agreements still require antitrust approval and are subject to other conditions.