Cisco is selling its TV set-top business for about $600 million, essentially unwinding one of its biggest acquisitions, and taking another step away from consumer products.
The San Jose networking company announced late Wednesday night that Technicolor is buying its connected-devices division in a cash-and-stock deal that it expects to close at the end of the year or the beginning of next year.
Cisco Systems bought Scientific-Atlanta in a $6.9 billion deal that closed in 2006. At the time, Scientific Atlanta was the second-largest U.S. maker of set-top boxes. The purchase came amid Cisco’s nascent push into the consumer market, and as CEO John Chambers looked to get in on the growing market for TV and Internet connectivity by selling equipment to cable providers.
Since then, Cisco has reversed its moves into consumer hardware, with one high-profile flop being the Flip video camera.
“Cisco will continue to refocus our investments in service provider video towards cloud and software-based services businesses,” wrote Hilton Romanski, Cisco’s senior vice president and chief strategy officer, in a blog post Wednesday night. The company is going to work with Technicolor on video and broadband solutions, and he will join the Technicolor board, he said.
Romanski said the company’s push into the connected-devices market in the past decade brought in $27 billion in revenue. At the end of fiscal 2015, the business will have brought in about $1.8 billion, he said. But other reports about the deal point out that Cisco was selling fewer set-top boxes amid increased competition, and Cisco’s sales of video products to service providers fell 18 percent in 2014.
Chambers is due to step down as CEO after 20 years. He will be replaced by Chuck Robbins on July 26.
Photo from Associated Press
