Linksys manufactures about 70 wired and wireless products for homes and small offices, selling them mainly at retail. The Irvine, Calif., company has about 300 employees.

Cisco will issue common stock worth about $500 million to acquire Linksys, and it expects to the deal to close in the fourth quarter of its fiscal year 2003, which ends in July. Cisco also expects charges for the acquisition to cost subtract no more than 1 cent per share from its fiscal 2004 profit. After charges, the company said it would add about 1 cent to 2004 earnings per share.

The acquisition has been approved by the board of directors of each company, but will be subject to closing conditions, including a waiting period, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Cisco said.