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).
- 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)