Belkin snaps up Cisco's home networking business
Cisco (Nasdaq: CSCO) on Thursday announced it is selling its Linksys home networking business to Belkin, marking the vendor's last move out of the consumer segment.
Neither Belkin nor Cisco revealed the terms of the deal, which they said is expected to be completed in March.
When Cisco completes this sale, it will mark the end of its involvement in the consumer segment. In 2011, Cisco sold its Flip video camera business. More recently, Cisco announced it would shut down its Umi video conferencing service.
The sale of the Flip camera business in 2011 was part of Cisco's broader effort to refocus its attention on its core routing business line to battle emerging competition from Juniper Networks (NYSE: JNPR) and Hewlett Packard (NYSE: HPQ).
"They made a commitment to investors that they were going to focus on their core areas," said Zeus Kerravala, analyst for ZK Research, in a Reuters article.
To ensure consistency for existing customers, Belkin said it would maintain the Linksys brand and offer ongoing support for those products. In addition, Belkin will honor all current and future warranties for current and future Linksys products.
Under the terms of the agreement, Belkin and Cisco plan to create a strategic relationship focused on various areas such as retail distribution, strategic marketing and products for the service provider market. Since Belkin will also have access to Cisco's specialized software solutions across all of its product lines, the company says it will be able to bring "a more seamless user experience for customers."
Looking forward, Belkin will also be able to help existing Linksys customers migrate their home networking environments to new applications and devices including smartphones, tablets, notebooks and home automation.
While Cisco does not specify its home networking revenues, the division that includes home networking reported a revenue decline of about 12 percent to $220 million in the last quarter.
Cisco may be leaving the home networking business, but it's a market that continues to rise. Infonetics, in its Home Networking Devices market share and forecast report, said "global sales of home networking devices grew 20% in 2011 from 2010, to $7.98 billion."
Belkin can now leverage an even broader customer base and the well-known Linksys brand to take a greater share of the home networking market segment.
Special report: The top wireline mergers & acquisitions in 2012
Cisco appoints Barclays to sell Linksys unit
Cisco signs agreement to purchase Cariden
Cisco acquires ClearAccess, boosts residential network management capabilities
Cisco's Chambers signals potential heirs to the CEO throne
Cisco buys WiFi software firm ThinkSmart Technologies