Cisco Systems Inc. (Nasdaq: CSCO), the No. 1 provider of Internet gear, said it had acquired private Virtuata, a two-year-old specialist in cloud computing and security.

Financial terms weren't disclosed.

The San Jose, Calif., Internet giant said it had acquired the smaller company in Milpitas, Calif., to obtain innovative capabilities for securing virtual machine-level information in data centers and cloud environments.

The technology and developers will be incorporated into Cisco's data center group, where they will report to Senior VP David Yen.

Virtuata was the latest company started by serial entrepeneurs Joe Epstein and Peter Danzig.

Epstein was a co-founder of Meru Networks (Nasdaq: MERU), of Sunnyvale, Calif., a specialist in wireless local-area networks and data security.

Danzig, a visiting lecturer at Stanford University, co-founded Wirama, which specialized in radiofrequency identification technology systems before its acquisition by Checkpoint Systems (NYSE: CKP). Then he worked for security specialist Ironport, which Cisco acquired in 2007.

Cisco, which reported cash and investments exceeding $48.4 billion in its third quarter ending in April, has made some other acquisitions this year of small, private companies and is completing the $4 billion takeover of NDS Group Ltd., of the UK.

NDS specializes in services that manage media and video content for cable and satellite broadcasters. The company is controlled by private equity giant Permira. Rupert Murdoch's News Corp. (NYSE: NWS) owns a 49 percent stake.

Shares of Cisco fell 8 cents to $16.11 in midday Tuesday trading.