Cisco Selling Off Linksys Unit to Belkin

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Cisco is selling off the consumer and networking gear unit it acquired a decade ago with the purchase of Linksys to Belkin for an undisclosed sum and will work with the buyer on distribution and merketing, according to company officials.

Cisco Systems Inc. is selling off the consumer and networking gear unit it acquired a decade ago with the purchase of Linksys to Belkin Corp. for an undisclosed sum, according to company officials.

As part of the deal, Belkin and Cisco will partner on retail distribution, strategic marketing and products for the service provider market, officials said.

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“Combined, Belkin and Linksys will create a world-class consumer networking technology provider with complementary innovation and engineering strategies,” Hilton Romanski, vice president in charge of corporate business development wrote in an internal Cisco blog late Wednesday. “Linksys will enhance Belkin’s capabilities to meet the needs of OEMs, as well as provide access to a large user base.”

Cisco officials admitted in mid-December that they were looking to shed consumer and SMB products, and that the vendor had hired investment bank Barclays to explore the sale of the former Linksys division, which had since become a fully integrated unit within Cisco that caters to small business and consumer wireless and basic networking needs. The move is seen as part of a much larger strategy that has Cisco refocusing on enterprise business and sets up for a major acquisition to jumpstart growth.

Cisco bought Linksys for $500 million in 2003 as part of a shift toward consumers. Selling Linksys marks the last vestige of Cisco’s decade-long flirtation with the consumer market, which included other questionable acquisitions such as the maker of the Flip video camera. However, Linksys was much more than simply a collection of consumer products sold through retail; its 9,000 reseller partners made Linksys products the favorite among small and distributed businesses around the world.

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From a channel perspective, offloading Linksys likely won’t be as painful as the assimilation. The two channels always had a significant amount of overlap; partners invested in the Cisco program will likely remain active and support both companies’ products.

Cisco likes to claim it's clairvoyant in being able to foretell coming trends and make strategic shifts for it and partners to capitalize. It will no doubt use that same language in the coming days following the sale of Linksys; just as it did when it bought Linksys in the first place.

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