Reports say that Cisco wants to sell off its Linksys business, which it acquired for $500 million in 2003. Linksys makes routers and other networking gear for home users.
Bloomberg’s Serena Saitto and Jordan Robertson first broke the story, writing, “Cisco Systems Inc. (CSCO), the largest maker of equipment for computer networks, has hired Barclays Plc (BARC) to find a buyer for Linksys, which makes routers for home wireless access, said people with knowledge of the situation. The unit may attract the interest of TV set makers seeking a recognized brand and technology, said the people, who asked not to be identified because the process isn’t public. Linksys is likely to fetch much less than the $500 million Cisco paid for it in 2003 because it is a mature consumer business with low margins, the people said.”
ReadWrite’s Brian Proffitt noted, “When Cisco picked up Linksys for a mere half-billion dollars, it was estimated that router maker had something like 39% of the home-networking market. Orders for Linksys products have since weakened significantly. In 2010, In-Stat said Linksys’ revenue amounted to just 9% of total revenue for the market segment.”
CRN’s Chad Berndtson observed, “Branding confusion between Linksys and Cisco’s small-business-focused products hasn’t been infrequent; Cisco in 2010 changed up the branding again so that the Linksys name applied only to consumer-grade products sold mostly through retailers. Earlier this year, Cisco was forced to apologize — twice — for security concerns following a firmware update to some Linksys Wi-Fi routers.”
Reuters added, “The sale is part of Cisco’s strategy to shed its consumer unit and focus on its software and technology services businesses. Last year, Cisco axed its Flip camera business as part of this strategy.”