Bloomberg is reporting that Cisco Systems (Nasdaq:CSCO) is selling off the Linksys unit. They have asked Barclays Capital to help find them a buyer. Linksys is a brand of home and small office networking products that Cisco purchased in 2003.
Sluggish Linksys sales have been dragging down Cisco financials and is most likely the reason for the spinoff. According to their November 20th, 2012 10-k filing, it says “The decrease in sales of Other Products was primarily due to lower sales of Linksys home networking products.” They had a $29 million drop from the previous quarter which accounted for an approximate 12% loss in that category.
Currently referred to as Linksys by Cisco, it was founded in 1988 by Janie and Victor Tsao. These two immigrants from Taiwan started the company in an Irvine, California garage. The company started by creating printer shares and by 1994, had 55 employees with an annual revenue of $6.5 million.
After establishing many key relationships with the nation’s most popular electronic retailers, they started branching out into Ethernet cards and personal routers. By the time Cisco acquired the company in 2003, Linksys had 305 employees and an annual revenue of over $500 million.
Cisco is currently trading at approximately $20 per share with a market cap of about $106 billion.