Telecom Lead America: Belkin is set to buy Cisco’s home networking business unit Linksys.
The deal will include products, technology, Linksys brand and employees.
“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,” said Chet Pipkin, CEO of Belkin.
Belkin aims to maintain the Linksys brand and will offer support for Linksys products.
After the transaction closes, Belkin will account for approximately 30 percent of the U.S. retail home and small business networking market.
Pipkin is expecting that Belkin’s WeMo home automation platform will help the company grow Linksys’ market presence.
“While part of Cisco, Linksys has continuously innovated, while strengthening the brand and expanding its market leadership. As part of Cisco’s commitment to service providers, we are pleased about this strategic relationship with Belkin to build on Linksys’ position of strength,” said Hilton Romanski, VP Corporate Business Development, Cisco.
The transaction will enable Belkin to have access to a large installed base that will be able to upgrade their networking environment to take advantage of new technologies in the smartphone, tablet, notebook and home automation arenas. Linksys will enhance Belkin’s capabilities to meet the needs of the service provider space and small business users.
According to analysts, Linksys is likely to fetch much less than the $500 million Cisco paid for it in 2003 because it is a mature consumer business with low margins. Linksys makes routers for home wireless access.
Recently, BusinessWeek reported that Cisco wants to sell Linksys as part of its strategy to exit consumer businesses while expanding in corporate software and technology services. Cisco CEO John Chambers eliminated 7,800 jobs over the past year and a half and closed businesses such as the Flip video-camera unit amid a slowdown in sales growth after a foray into consumer technologies backfired.