Bloomberg is reporting that enterprise networking gear maker Cisco has engaged the services of Barclays to offload its Linksys division. Linksys, which makes home networking gear like SOHO routers and wireless access points, was acquired by Cisco in 2003 for $500 million, and its products have been sold with the branding “Linksys by Cisco” since. Linksys products have retained their focus on home users, while Cisco’s main branding has been reserved for its enterprise equipment.

According to the Bloomberg report, the move to sell Linksys comes as part Cisco’s broader strategy, which will see it exit the consumer space entirely. The report makes a comparison to Cisco’s Flip video camera acquisition in 2009; in spite of promising technology and good sales, the small HD video cameras were discontinued by Cisco in 2011. Speculation at the time was that Cisco had been more interested in acquiring Flip’s intellectual property portfolio and integrating it into their own videoconferencing technology rather than actually selling pocket-sized video cameras to consumers.

The divesting of Linksys does indeed align with the direction Cisco stated it was headed in 2011, namely the shedding of consumer businesses and focusing on five specific areas: “core routing; switching and services; collaboration; architectures; and video.” Cisco has a tremendous presence in data centers and telecom closets, and there’s a lot of shareholder value in focusing on higher-margin enterprise hardware rather than notoriously low-margin consumer gear. Bloomberg speculates that the Linkys sale will likely return far less than the $500 million Cisco originally paid nine years ago, precisely because Linksys products carry such a low margin.

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via Ars Technica » Technology Lab