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Aruba Networks retreats after Cisco buys competitor

Network access solutions developer Aruba Networks (ARUN) is retreating after Cisco (CSCO) agreed to buy Meraki, which creates cloud managed networking solutions. Cisco will pay about $1.2B for Meraki, and the tech giant said the deal would help it simplify network management, empower the mobile workforces of its customers, and generate new revenue opportunities for partners. "The acquisition of Meraki enables Cisco to make simple, secure, cloud managed networks available to our global customer base of mid-sized businesses and enterprises," added Rob Soderbery, senior vice president, Cisco Enterprise Networking Group in a statement. In a note to investors earlier today, William Blair analyst Jason Adler wrote that Meraki has developed cloud-based wireless network controllers, while Aruba's controllers are based in a different location than the network. "Controller-less" networks are particularly attractive to smaller networks, and the acquisition should boost Cisco's appeal to small and medium businesses, added the analyst. While Adler believes that Aruba's competition could intensify as a result of the deal, he predicts that Aruba will continue to hold its own in the enterprise market. In fact, Aruba still can gain market share, according to the analyst, who recommends buying the shares on today's weakness. In mid-morning trading, Aruba fell 21c, or 1.12%, to $18.61