Cisco to shed Linksys
Not a complete surprise. It was never quite a fit.
Networking equipment company Cisco Systems Inc has hired Barclays to sell its Linksys home router unit, a report said on Sunday.
The business, which Cisco acquired for $500 million in 2003, will likely be valued for less because it has low margins, according to Bloomberg.
The sale is part of Cisco's strategy to shed its consumer unit and focus on its software and technology services businesses.
Last year, Cisco axed its Flip camera business as part of this strategy.
Maybe when they are free from Cisco, the Linksys people can come up with products and services that offer better value, and are tested more extensively before release to the public. Oh wait, some venture capitalist firm, borrowing 99% of the purchase price, will probably be the buyer, and they "must" have an immediate ROI of 2000% to pay back the loan within 1 year. Look for a gutted company to be the result of this sale.
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said by davidhoffman:
...some venture capitalist firm, borrowing 99% of the purchase price, will probably be the buyer, and they "must" have an immediate ROI of 2000% to pay back the loan within 1 year. Look for a gutted company to be the result of this sale.
And so it goes... Capitalism has run amok!
Alternative scenarios are possible.
The rumors are swirling once again in technology circles with a host of potential suitors in the mix, including giants Dell Inc., Microsoft Corp and Netgear Inc. to local players such as Fountain Valley-based networking equipment maker D-Link Systems Inc.
The story that is playing out - one where a (usually large) company buys another as an avenue to a market it sees as lucrative but doesn't understand, mismanages the effort by losing key talent, diluting the brand or under investing and finally jettisons the purchase to cut its losses - is probably more common than a badly executed LBO.
They must not have paid attention when giant Cicso bought them and their value plummeted. At least the founders, who built a great product, made good $$.
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