Cisco to Buy Linksys for $500 Million

Officials of Cisco Systems Inc. said today they plan to buy home and small office networking vendor The Linksys Group Inc. of Irvine, Calif. The move marks Ciscos first foray into the burgeoning market for wired and wireless networking gear for consumers and SOHO (small office/home office) users.

According to officials, Cisco will issue common stock worth $500 million to acquire Linksys.

“Fueled by consumer broadband adoption, the home networking space has experienced mass market acceptance. Linksys has captured a strong position in this growing market by developing an extensive, easy-to-use product line for the home and small office,” said Cisco President and CEO John Chambers in a statement. “This acquisition is a solid example of Ciscos strategy to broaden its end-to-end portfolio of network solutions into high-growth markets such as wireless, voice-over-IP and storage area networking.”

Privately held Linksys makes some 70 different products, including wireless routers and access points, wireless network adapters, and wireless print servers, as well as wired products such as Ethernet routers and cable modems, unmanaged switches and hubs, print servers, and network attached storage.

The deal will make Linksys a division of Cisco under the direction of Charlie Giancarlo, senior vice president and general manager of product development at Cisco in San Jose, Calif. Products will continue to be sold under the Linksys brand through its existing retail, distributor and e-commerce channels, officials said.

On Tuesday, Cisco agreed to acquire IP telephony software developer SignalWorks Inc. of Mountain View, Calif., for $13.5 million.