Cisco Gets Ready To Sell Linksys

Reports suggest that networking giant Cisco is preparing to sell its Linksys subsidiary, which manufactures routers, modems and similar equipment for homes and small offices.

According to Bloomberg, Cisco has appointed Barclays bank to find a buyer. The rumours about the sell-off originally appeared last year, after CEO John Chambers announced that the company would continue closing down underperforming consumer businesses.

Back to the drawing board

Linksys was founded by two Taiwanese immigrants in 1988, and acquired by Cisco in 2003 for $500 million. The purchase was widely seen as an attempt to diversify the business and enter the consumer market.

As part of this strategy, Cisco also acquired Pure Digital, a company responsible for the once-popular Flip pocket video camera, and the set-top box maker Scientific-Atlanta. “The lines between consumer and business will completely blur,” said Chambers at the time. “You need to be a major player in consumer [technology].” He also called the acquisition an “architectural play”.

However, the foray into the consumer market wasn’t successful, and after just two years Cisco closed Pure Digital and announced a new strategy that would see it return to core networking business.

As part of the restructuring, the company axed 7,800 jobs over the past year alone, and now, it reportedly wants to get rid of Linksys.

Analysts predict that whatever the price Cisco manages to get for the company, it will be lower than what it paid back in 2003. Barclays, the bank that allegedly oversees the transaction, is also advising Google on the sale of the Motorola Home business.

Despite some challenges, Cisco is expected to finish this quarter with revenue growth between 3.5 percent and 5.5 percent year-on-year.

Cisco CEO John Chambers is expected to step down in the near future, and other Cisco candidates are jockeying for position.

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