Belkin International announced Thursday that it has agreed to buy Linksys, maker of networking hardware for the home, from networking giant Cisco for an undisclosed sum. The purchase, which is expected to close in March, will mark Cisco’s exit from the highly competitive, low-margin consumer electronics market.
Cisco has been active in the consumer market for about a decade, having acquired Linksys in 2003 for $500 million. The diversion proved to be less than fruitful, so amid struggles with weak sales and falling net income the company initiated a restructuring in 2011 that put its consumer businesses on the chopping block. The first to go was the Flip video camcorder line, which was shut down that year. In 2012 the company shuttered its Umi consumer videoconferencing product, which had been on the market just over a year. And now the time has come for Linksys routers, gateways, and related products.
Upon completion of the divestiture, Cisco’s undivided attention will once again return to its core (and much higher-margin) business of providing networking equipment to enterprise and service provider customers.