Cisco Buying Linksys for $500M

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Cisco Systems Inc. opened a big door into home networking Thursday with the
announcement that it will acquire leading consumer-products provider Linksys
Group Inc. for $500 million in stock.

The deal, expected to close in the fourth quarter, calls for Cisco to issue
$500 million in common stock to acquire Irvine, Calif.-based Linksys and all
outstanding employee stock options.

Once the transaction is complete, the company and its 300 employees will
become an operating subsidiary of Cisco. Linksys CEO Victor Tsao will continue
to lead the subsidiary, reporting to Charlie Giancarlo, Cisco's senior vice
president and general manager of product development.

The deal has been approved by the Linksys and Cisco boards of directors.

Linksys has become a player in the cable home-networking field, snagging one
of the first CableHome 1.0 certifications for a home-networking gateway during
the last testing round at Cable Television Laboratories Inc.

Last year, it also struck a deal with then-AT&T Broadband to provide
home-networking gear for a trial in the MSO's Seattle system.

"Linksys has captured a strong position in this growing market by developing
an extensive, easy-to-use product line for the home and small office," Cisco
president and CEO John Chambers said in a release.

"This acquisition is a solid example of Cisco's strategy to broaden its
end-to-end portfolio of network solutions into high-growth markets such as
wireless, voice-over-IP [Internet protocol] and storage-area networking," he
added.

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