UPDATE 1-Radvision shares fall as Cisco agrees to buy Tandberg

(Recasts; adds Radvision comment, updates share movement)

Oct 1 (Reuters) - Shares of Israel-based maker of video network infrastructure Radvision (RVSN.O) fell as much as 37 percent as its largest customer Cisco (CSCO.O) agreed to buy Norway's Tandberg TAA.OL for $3 billion in cash, prompting at least two brokerages to downgrade the stock.

"Radvision technology is deeply embedded into a range of Cisco videoconferencing solutions," the company said in a statement.

Radvision also said it is in the process of assessing the effect of this proposed transaction on its business over the short and long term and any opportunities it may create.

Radvision, which gets about 40 percent of its overall revenue from Cisco, counts Tandberg as a key competitor, RBC Capital Markets said in a note to clients.

RBC analyst Daniel Meron downgraded Radvision to "underperform" from "sector perform," and said "the move will pressure Radvision as the company loses its prime channel partner and in essence the former friend is becoming a foe."

"We expect sales to diminish in coming 9 months as the deal progresses as distributors and customers will likely wait for Tandberg-powered products and the focus of Cisco sales force will shift," Meron added.

Meron also cut his price target on the stock of Radvision to $7 from $10.

Radvision provides products and technology that enable real-time voice, video and data communication over packet and mobile third generation (3G) networks, including the Internet and other Internet Protocol (IP) networks.

Separately, Cantor Fitzgerald downgraded Radvision to "sell" from "buy," saying "Cisco buying Tandberg is bad news for Radvision."

The brokerage also cut its price target to $6.50 from $11.

"Tandberg is directly competitive with Radvision and thus we believe that the company's Cisco-based revenue stream is at risk in the intermediate to longer term as a result of the announced acquisition of Tandberg," Cantor analyst Edward Jackson said in a note to clients.

Shares of the company were down $2.76 at $6.10 Thursday afternoon on Nasdaq. They touched a low of $5.61 earlier in the day. (Reporting by Shrutika Verma in Bangalore; Editing by Maju Samuel)