Cisco (NASDAQ:CSCO) is selling its STB plant in Juarez, Mexico, and is shedding about 5,000 workers from its books as it strives to reach the $1 billion in cost reductions CEO John Chambers promised last May. (See related story: Cisco announces plans to trim workforce by 11,500.)
But the STB sale to Taiwan's Foxconn Technology Group raises a couple of questions: Is it a sign that set-top boxes are being pushed into irrelevance, or is Cisco simply exiting a business it no longer sees as part of its core?
Either way, the sale, which is expected to close in October, unloads an operation Cisco acquired when it bought Scientific Atlanta in 2006.
In a press release, Cisco said the deal "brings Cisco's video equipment manufacturing in line with the company's overall strategy of partnering with world-class contract manufacturers to deliver the highest-quality products to customers."
Or, as Cisco's EVP and COO Gary Moore said, "Today's announcement further simplifies and consolidates Cisco's manufacturing operations."
The company has worked with Foxconn for years, Moore said, and he called it "a strong strategic fit with Cisco's long-term goals."
"We remain fully committed to our service provider customers and partners, and will continue investing in existing and new video platforms, including set-top-boxes, as part of our Videoscape vision," he said.
Videoscape is Cisco's vision of TV for the future, bringing together digital TV and online content with social media and communications applications to create an immersive home and mobile video entertainment experience.
Although Videoscape includes a set-top box and will help pay-TV operators stay relevant in a consumer space that is rapidly evolving to demand more over-the-top content, it is equally about merging the video flow into a single, high-quality stream--with Cisco at the helm.
For more:
- see this release
- check out FierceEnterpriseCommunications' take
Related articles:
Cisco unveils its vision of TV of the future
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Bloomberg: Cisco to cut 10,000 jobs this year
Analyst: Cisco could trim 5,000 jobs by August
Analyst: Cisco will have to lower prices to achieve turnaround