Industry News Desk
Cisco Wants to Dump Linksys: Bloomberg
Cisco bought the Linksys business for $500 million in 2003
By: Maureen O'Gara
Dec. 18, 2012 09:00 AM
Cisco has hired Barclays Plc to sell its Linksys wireless home router unit according to Bloomberg.
Barclays is also advising Google on the sale of its Motorola Home Business, which sells set-top boxes and cable TV equipment.
Cisco bought the Linksys business for $500 million in 2003. It's not expected to fetch anywhere near that because it's a mature low-margin business.
Linksys quality also suffered under Cisco's administration. Seeking Alpha says Linksys under Cisco repeatedly violated the open source General Public License (GPL).
Bloomberg figures TV makers might be interested. Seeking Alpha, which would like to see the back of Cisco CEO John Chambers, suggests Belkin.
In a turnabout Cisco now wants out of the consumer business to focus IBM-like on corporate software and technology services. It killed its Flip camera business last year because of overwhelming smartphone competition.
It also owns Scientific Atlanta set-top boxes, which it bought for $5.2 billion in 2006, and in July bought NDS Group Ltd for $5 billion, Cisco's third-largest acquisition. NDS makes software for paid-television channels used by British Sky Broadcasting Group, Canal Plus and DirecTV.
Chambers said a few days ago that Cisco had gone too long without a major acquisition and didn't invest enough in the companies it acquired. He figured the lack of a major acquisition cost Cisco 1% on revenue. Figure a major acquisition would run about $10 billion or so.
Bloomberg suggests Cisco, whose sales growth has slowed to less than 8% a year, could buy Citrix, NetApp or Rackspace Hosting.
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