Networking

12:25 PM
Connect Directly
RSS
E-Mail
50%
50%

Cisco To Sell Linksys, WebEx?

Shareholders are pushing the company to unload non-core businesses, fueling speculation that the consumer and small business networking brand and web conferencing service are for sale.

Cisco Umi
Slideshow: Cisco Umi Takes Telepresence To The Home
(click image for larger view and for slideshow)
Have technology mergers gone too far? A growing number of Cisco stockholders seem to think so, driving rumors that the networking conglomerate is about to reverse some of its famous acquisitions. Most of the speculation is focused on its WebEx and Linksys subsidiaries, two business units that have little in common other than that they're the first way most people encounter a Cisco product--Linksys through its consumer and small business networking gear and WebEx through invitations to participate in online meetings. Of the two, WebEx is the most likely to be sold as it is less integrated with Cisco, not part of the core switching business, and more likely to attract a buyer.

"Chambers has been getting heat from some of his larger shareholders," Brenon Daly, research director for M&A at analyst firm The 451 Group, said in an interview. He doesn't think the rumors are true, but notes that Cisco wouldn't be the first vendor to admit that its acquisition strategy has been flawed. "It's just like last summer, when a block of Symantec shareholders agitated for the decoupling of Veritas." He also cites Iron Mountain's sale of its digital data storage business to Autonomy last week for $380 million as a more recent example of a company that yielded to stockholder pressure, offloading peripheral assets to focus on core business.

Cisco itself declined to comment, a spokesperson saying only that the company does not address rumors. However, Cisco did issue a statement last month saying that it would refocus its consumer business in an attempt to make the home network into a platform for video, something that could mean exiting the basic home router market epitomized by Linksys. Perhaps more important, Cisco has staked its core enterprise business on persuading customers that the network is more than just a commodity, a vision belied by its playing in the commoditized world of home networking.

WebEx helps Cisco sell enterprise switches, but some say it could be more successful outside. "A lot of companies would covert that asset," Jeff Cavin, CEO of WebEx competitor FuzeBox, said in an interview. His company currently partners with Cisco on telepresence, as many of his customers use Cisco telepresence suites as endpoints and need to run traffic over Cisco infrastructure. "Partnering would be easier if they didn't have WebEx," he said. A key part of the partnership involves the Telepresence Interoperability Protocol (TIP), a way of getting disparate videoconferencing systems to work together that he says Cisco released under pressure from the government as a precondition for its acquisition of videoconferencing system manufacturer Tandberg.

Cavin said he thinks that without WebEx and Tandberg, Cisco would have had no incentive to keep the protocol under wraps and been free to cooperate with FuzeBox and other WebEx competitors. The same applies to WebEx itself; an independent WebEx could cooperate with any of Cisco's competitors. However, those competitors also make up many of the potential buyers that also would want it to drive sales of servers and switches. Cavin cites CRM vendors and other networking companies as possible acquirers, though Cisco is unlikely to want to sell to a competitor.

Microsoft's $8.5 billion purchase of Skype shows that collaboration technology vendors can reach high prices, but there's only one Microsoft. Its closest competitor in the market is Google, which hardly needs WebEx to drive adoption of its services. However, LinkedIn's rocketing stock price hints at a potential third option for WebEx. If Cisco wanted to make a quick profit without making a deal with a competitor, an IPO might be a better option than a sale. By retaining a stake, Cisco could benefit from any post-IPO boost in the stock price and also keep some control.

Attend Enterprise 2.0 Boston to see the latest social business tools and technologies. Register with code CPBJEB03 and save $100 off conference passes or for a free expo pass. It happens June 20-23. Find out more.

Comment  | 
Print  | 
More Insights
Cartoon
Hot Topics
4
Real-World SDN, Lesson 2: Conquer The Enemy Within
Symon Perriman, Senior Technical Evangelist, Microsoft,  8/25/2014
2
Why Large Data Centers Need Overlay Networks
Cisco Press, Publishing Alliance,  8/21/2014
White Papers
Register for Network Computing Newsletters
Current Issue
2014 Private Cloud Survey
2014 Private Cloud Survey
Respondents are on a roll: 53% brought their private clouds from concept to production in less than one year, and 60% ­extend their clouds across multiple datacenters. But expertise is scarce, with 51% saying acquiring skilled employees is a roadblock.
Video
Slideshows
Twitter Feed