Cisco Bats Away Linksys, WebEx Sale Rumors


Cisco on Thursday waved away rumors that it will soon sell off its Linksys and WebEx businesses as part of an ongoing restructuring.

It didn't deny that the businesses will be sold, but in response to a CRN inquiry, a Cisco spokesperson declined to comment specifically about the rumors. The spokesperson referred CRN to a recent press release on the future of Cisco's consumer business, and also to recent, public comments made by Cisco Chairman and CEO John Chambers about the growth of Cisco's collaboration business, which houses WebEx.

U.K.-based news outlet The Register on Wednesday cited sources said to be familiar with the situation as saying that Cisco is close to selling off its Linksys home networking business, and was considering a sale of its WebEx platform as well. Both units came to Cisco via acquisitions: Linksys in 2003 and WebEx in 2007.

Speculation over Cisco selling off one or more business units comes amid a period of intense public scrutiny for the networking titan, which has posted several quarters' worth of disappointing earnings results. Cisco said on its most recent earnings call that it will look to cut $1 billion in expenses over the next fiscal year and also make cuts in underperforming business units.

Cisco has already eliminated its Flip video camera line as part of changes to its struggling consumer unit, and has also said it will look to reduce headcount -- a layoff said to be as large as 5,000 employees, according to most industry observers.

A sale of the Linksys unit would represent another cut to Cisco's consumer business, but in the April 12 press release to which a Cisco spokesperson referred CRN, Cisco said it will "refocus its home networking business for greater profitability and connection to the company's core networking infrastructure as the network expands into a video platform in the home."

The Linksys brand now only refers to some consumer-level Cisco products; Cisco small business products were rebranded as Cisco in 2008.

A sale of WebEx would be particularly surprising. In Cisco's most recent earnings report, Cisco reported that its collaboration business -- which houses not only WebEx but also its videconferencing portfolio and other products -- grew 39 percent year-over-year, and had continued to grow more than 25 percent every quarter for each of the previous five quarters.

WebEx is one of the key products in Cisco's collaboration and unified communications strategy, and is also seeing increasing interest in a market segment where Cisco is gaining strength in the channel: small and medium-sized businesses.

WebEx is currently available to any Cisco Small Business or Express Foundation specialized partner, and also those partners designated as Express UC or Advanced UC. That's a solution provider base of about 10,000 Cisco partners, according to Cisco.

Cisco also recently made WebEx sales eligible for profitability payments under Cisco's Partner Development Funds (PDF) and Value Incentive Program (VIP).

Ryan Halper, president of Cynnex Networks, a Seattle-based solution provider, focuses exclusively on SMB customers and is a member of Cisco's Small Business Executive Exchange Advisory Board. WebEx interest among customers is increasing, Halper said, and for Cisco to sell WebEx would be a "horrible idea."

"To me it's a central piece of their collaboration and cloud strategy revolving around unified communications, not to mention the best if not only universal web communication software tool Cisco has to extend boundaries beyond the network," Halper said.

Another longtime Cisco solution provider said speculation about Cisco selling WebEx is likely "the rumor mill spinning out of control."

"Look, Cisco's got a target on its back right now, and everyone's taking a shot," said the solution provider, who asked not to be identified. "Linksys I don't know about, but WebEx is doing some good things for Cisco. It's a world-class platform and I'll be really surprised if they part with it."