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Cisco Systems, the world’s biggest maker of computer-networking equipment, is looking to further distance itself from the consumer space with the sale of its home networking business unit to Belkin for an undisclosed amount. The transaction includes the company’s Linksys brand, which it originally acquired in 2003 for $500 million, as well as other products, resources and technology. Belkin is also bringing Cisco's home networking employees into the fold.
The buyout is expected to grow Belkin's reach considerably. According to the company’s estimates, after the deal closes it will account for approximately 30% of the U.S. retail home and small business networking market. The transition is expected to be a smooth one too, as Belkin intends to maintain the Linksys brand and will honor all valid warranties on current and future Linksys products.
“We’re very excited about this announcement,” Belkin CEO Chet Pipkin said in a statement. “Our two organizations share many core beliefs – we have similar beginnings and share a passion for meeting the real needs of our customers through the strengths of an entrepreneurial culture. Belkin’s ultimate goal is to be the global leader in the connected home and wireless networking space and this acquisition is an important step to realizing that vision.”
Cisco has been moving away from the consumer market for a while as part of a strategic plan to trim down the company's money-losing divisions and focus more on business and enterprise products instead.
The deal will also see some sort of tie up between Belkin and Cisco, which will collaborate on a variety of initiatives including retail distribution, strategic marketing, and products for the service provider market. Cisco will offer its specialized software solutions while Belkin will bring its product line to the table.
The deal is expected to close in March.
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