January 24, 2013 8:30 pm EST-Cisco Systems, Inc. (NASDAQ:CSCO) has just sold its home networking business unit, including the well-known Linksys router brand, to privately-held Belkin International, Inc. (PrivCo Private Company Ticker: BELKINTP). This sale makes it clear that Cisco Systems is determined to exit the consumer networking business, which ultimately proved to be a costly distraction from their core telecom business.

LINKSYS REVENUES IN DECLINE SINCE 2009

Cisco bought Linksys in March 2003 in a $500 million all-stock deal. After an initial period of growth, the Linksys business declined for several years in a row. Most recently, PrivCo data shows that Linksys' revenue fell 6% from $417.3 Million in 2009 to $392.1 Million in 2010 to an estimated $360 Million this year. PrivCo estimates that based on Linksys' declining revenue and comparable M&A deal multiples, Belkin paid Cisco less than what Cisco originally paid for Linksys, or a PrivCo estimated $275 million in cash (based on confirmed Linksys revenue and PrivCo data on comparable M&A deal multiples for the sector, and confirmed by sources familiar with the deal as "within 5%" of the acquisition price).

DEAL BOSTS BELKIN'S REVENUE BY 36%, HOME NETWORKING MARKET SHARE TO 30%
 
Belkin's Linksysacquisition will add approximately $360 million to privately-held Belkin's $1.05 billion 2012 annual revenue (according to PrivCo's private company financial data on Belkin). This single deal boosts privately held Belkin's 2013 revenue by over 36%. After the acquisition, Belkin International will account for about 30% of the U.S. retail home and small-business networking market.The acquisition of Linksys falls in line with CEO Chet Pipkin's vision of becoming the "global leader in the connected home and wireless networking space."
 
BELKIN FOUNDER CHET PIPKIN NOW A BILLIONAIRE
 
Belkin International, Inc. is majority owned by Chet Pipkin, who PrivCo calculates is now officially a billionaire (according to a new PrivCo valuation of privately-held Belkin International).
 
 
Belkin International, Inc. Snapshot:
  • Founded: 1983
  • Headquarters: Playa Vista, California
  • Ownership:Chet Pipkin (majority), Summit Partners (minority)
  • Revenue:$1.47B (2013 PrivCo Projection), $1.05B (2012), $998M (2011),$986M (2010),$926M (2011)
  • Employees:1,250 (2012)
  • Belkin Valuation:$1.14B (PrivCo valuation of Belkin is based on projected 2013 revenue and comparable company multiples)
 
 

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