Cisco is rumored to be considering selling its Linksys and WebEx businesses, though company spokespeople reportedly indicate that it may not be the case.
wide-ranging changes going on within Cisco Systems-including executives'
decision to dump the popular Flip video camera business-attention has turned to
what other moves the networking giant will make to get back on solid footing.
news site The Register
reported that "people familiar with the situation"
said Cisco (NASDAQ: CSCO) officials are considering selling the company's
Linksys home networking and WebEx collaboration businesses, with the
announcement of the moves coming as early as next week.
speculation comes after Chairman and CEO John Chambers, during a May 11
conference call with analysts and journalists to announce quarterly earnings,
said the company would continue to shed
underperforming business units
and that job cuts are on the way.
spokespeople have declined to comment on the speculation, but have pointed to
recent comments company officials have made about both the company's consumer
business-of which Linksys is a part-and the collaboration business, which
includes WebEx. The indications are that both businesses are important parts of
Cisco's overall strategy.
April, Chambers-after several quarters of disappointing financial numbers-told
the company's 73,400-plus employees in an internal memo that changes were on
the way to address what he said was a problem caused less by strategy and more
by execution and accountability. About a week later, on April 12, Cisco
announced it was paring back its consumer business, including shuttering
the Flip video business
that the company had inherited from its $590
million acquisition of Pure Digital in 2009. In the announcement, Cisco
officials also said they were planning to make the Linksys unit more profitable
by binding more tightly with the company's overall networking business. Linksys,
which Cisco bought in 2003, was its first major acquisitions to expand its
For its part,
WebEx is part of Cisco's larger collaboration efforts, which Chambers said
during the May 11 conference call is growing into a $4 billion business, saw
revenue rise 39 percent over the same time last year and grew 25 percent over
the last five quarters. Chambers and other Cisco officials have been vocal in
their belief that video will dominate Internet traffic in the years to come,
and that network will be the basis for that traffic going forward.
WebEx, which Cisco bought in 2007 for $2.9 billion, continues to be used by an
important segment of that market-SMBs-which Cisco has been courting for the past
couple of years.
tech players have been aggressively pursuing a video-collaboration strategy, a
trend most recently illustrated by Microsoft's
$8.5 billion bid
to buy voice over IP provider Skype.
has been a key part of Cisco's efforts to expand into more than 30 new
businesses-or what officials call "adjacencies"-over the past few years to grow
its footprint beyond the core networking space, though Chambers has said the
adjacencies all have networking at their foundation.
recent quarters, Cisco has been plagued by disappointing earnings and lowered
forecasts, caused in part by weakness in its core switching business, as well
as its public government business. Many analysts applauded Chambers'
announcement last month that Cisco was pulling back on its consumer initiative,
saying that such efforts had taken the company's attention away from its
networking business and opened it up to incursions from rivals such as
Hewlett-Packard, Huawei, Juniper Networks and Avaya.
streamlining of the consumer business-including the ditching of the Flip-led to
550 job cuts. During the May 11 conference call, Chambers said that Cisco would
pare $1 billion in operating expenses this year through such moves as closing
down underperforming units and layoffs. Cisco executives did not elaborate on
the number of layoffs, but some analysts have speculated that it could
be as high as 4,000