Is Cisco Selling Off Linksys?
December 17, 2012

Cisco May Have Hired Barclays To Sell Linksys

Michael Harper for — Your Universe Online

Cisco, the largest manufacturer of computer equipment and networks, is looking to get rid of their wireless router division, according to a recent report by Bloomberg News.

According to the report, Cisco has now hired Barclays PLC to find a buyer for Linksys, the home router business Cisco bought in 2003 for $500 million. The unnamed sources who spoke with Bloomberg said any potential buyer is likely to pay much less than $500 million. As it stands, Linksys is an older company with low profit margins, making it less attractive to some buyers.

However, Bloomberg´s sources have also said a potential buyer might come from the television industry. As more television makers are looking to integrate wireless connectivity and Internet options into their “Smart” televisions, they might be more inclined to take on Linksys as they already have a trusted name in consumer electronics.

Though Linksys may be a recognized brand in the consumer market, Cisco has been placing much of their focus on corporate software and enterprise solutions. In their attempts to exit the consumer market, CEO John Chambers has eliminated as many as 7,800 jobs in the past year alone. Cisco also famously killed the popular Flip video camera last year as sales of the handheld device began to slip.

While the Flip camera had once been a go-to device for users who wanted to quickly capture a video and transfer it to a computer with ease, other handheld devices, such as smartphones, began to cut into Flip´s sales. Cisco purchased Flip in 2009 for $590 million.

So far, spokespersons from both San Jose, California-based Cisco and London-based Barclays have denied to comment on these rumors.

According to Bloomberg, Cisco still has another iron in the consumer market fire with its Scientific Atlanta set-top box and NDS Group LTD, a television software company. Cisco purchased NDS this July for $5 million.

Barclays is also seeking a buyer for Google´s Motorola´s Home Business which sells set-top boxes and other equipment to cable operators.

Cisco and Linksys suffered a PR black eye this summer after owners of some of Linksys´ routers noticed that their login credentials no longer worked. Cisco had recently rolled out a new service called “Connect Cloud” which was meant to give users access to their routers “Anytime, anywhere” as well as run a host of apps meant to squeeze even more functionality from the routers.

Connect Cloud also came with a few caveats. The terms of use agreement mentioned that Cisco reserved the right to terminate service to a router if pornographic or offensive material had been accessed by the router. Cisco also threatened to terminate service if a user was found to violate “intellectual property rights,” or pirate material from the Internet. In other words, Cisco would be watching these users´ Internet history and shut down any they felt had violated their terms.

Further still, Cisco rolled out this firmware update automatically to EA2700, EA3500 and EA4500 routers. When users tried to access their routers, they were told to sign up for this service.

If a user decided to circumnavigate this service and stick to the traditional style of router operation, Cisco would eliminate their advanced privileges, effectively forcing these customers into being watched by their router. Cisco later apologized and made Connect Cloud an opt-in feature rather than a mandatory one.