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December 17, 2012

Cisco News - Cisco Hires Barclays to Sell its Linksys Home Router Unit

By Shankar Pandiath, TMCnet Contributor

Computer networks systems manufacturer, Cisco (News - Alert) Systems Inc., has hired Barclays to offload its Linksky home router unit.

Cisco is focusing on its software and technology services businesses and wants to get back to the high margin enterprise networking sector. The sale of its Linksky home router unit is a part of that strategy.

Cisco axed its Flip camera business last year as it was not strategically viable. It has now hired British banking giant Barclays, plc. to find a buyer for its Linksys (News - Alert) division that makes routers for home wireless access.

Cisco acquired Linksky for $500 million in 2003 to get into the consumer networking business. Notable products, especially the WRT54G wireless router, which was the favorite of tech-savvy punters, were launched by the company.

But Cisco has now been pulling back from the consumer networking market.

According to Bloomberg (News - Alert), Linksky will now be valued for less because it has low margins.

It is also being said that Cisco will be lucky to get its $500 million back, as Cisco is now focusing on flogging both network infrastructure hardware and servers. The tides have changed and Cisco is expected to get hit as software-defined networks become more and more popular.

Linksys products normally have low margins compared to Cisco’s core enterprise business. With Cisco’s slowing sales growth, the decision to offload Linksky didn’t really come as a surprise to market observers.

It was also expected that Cisco will now exit the consumer businesses and bolster its presence in corporate software and technology.

In addition to Linksys, Cisco operates in the home market with its Scientific Atlanta set-top-box unit and with NDS (News - Alert) Group Ltd., a software maker for paid-television channels. Cisco recently completed its $5-billion acquisition of NDS in July this year.

For the last couple of years, Cisco has been aggressively pursuing an acquisition-led growth strategy. In its efforts to diversify its business and enter consumer markets in a better way, Cisco strives to be a leaner and more focused organization so that it is better prepared for its challenges ahead.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO Miami 2013, Jan 29- Feb. 1 in Miami, Florida.  Stay in touch with everything happening at ITEXPO (News - Alert). Follow us on Twitter.

Edited by Braden Becker

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