Back to top

Analyst Blog

Zacks Equity Research

Cisco to Sell Linksys to Shift Focus

CSCO HPQ

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Reportedly, Cisco Systems Inc. (CSCO - Analyst Report) will be selling its Linksys wireless router unit. According to media reports, the company has hired Barclays (BCS) to help it sell the home wireless-router company.

This is yet another step by Cisco to exit its consumer-focused business, while strengthening its presence in corporate software and technology services.

In 2003, Cisco acquired Linksys for approximately $500 million in order to make an entry into the consumer networking market. However, strong competition has negatively affected the margins in this business, with a corresponding negative impact on the company’s profits. Now, nearly 10 years later, it looks like Cisco is trying to get out of this market.

The current deal clearly reflects Cisco’s strategy of downsizing its consumer business in order to save cost and expand in certain strategic areas, including cloud computing, which is viewed by many technology firms as a key area for future growth.

Over the past year, the company has closed several of its consumer businesses, such as the Flip video-camera unit, and reduced about 14% of its global workforce, or around 11,500 employees.

As a part of its cloud and networking expansion strategy, Cisco has made three acquisitions in November. The company has acquired Cariden, Meraki and Cloupia for $141 million, $1.2 billion and $125 million, respectively, in line with its growth strategy.

Cisco Systems is a leading provider of IP-based networking and other products. Though Cisco still dominates in the IP routing market, it has been facing challenges in the Ethernet switching business from rivals such as Hewlett-Packard Company (HPQ - Analyst Report) and Chinese manufacturers like Huawei.

Currently, Cisco has a Zacks #3 Rank (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%