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Cisco will pay approximately $271m in cash and retention-based incentives in exchange for all shares of Lightwire. The deal is expected to go through in the third quarter of Cisco’s fiscal year 2012, whereupon Lightwire’s employees will be integrated into Cisco’s Tranceiver Modules Group Business Unit and Supply Chain Operations Group.

The acquisition will allow Cisco to deliver cost-effective high-speed networks with advanced optical connectivity, thanks to Lightwire’s considerable expertise in CMOS photonics technology, which enables switches, routers and optical transport systems to provide higher-density optical connectivity at a lower cost.

“The acquisition of Lightwire will support our data centre and service provider customers as they manage the continuing deluge of network traffic alongside tight capital and operating budgets,” said Surya Panditi, senior vice president of Cisco’s Service Provider Networking Group. “With the combined know-how from Cisco in silicon design and Lightwire in CMOS photonics, we will transform Cisco’s optical connectivity business to an integrated technology platform that supports our customers’ burgeoning need for cost-effective high-speed networks.”

Cisco recently posted record revenues of US$ 11.5bn for the quarterly period which ended January 28th, 2011, with GAAP net profits for the period up a whopping 43.5%. Company CEO John Chambers attributed the strong results to a three-year plan to drive earnings faster than revenue, the earlier-than-planned achievement of a billion dollar cut in expenses, and continuing innovation.