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Cisco Sold Its Set-Top Box Business to Technicolor

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Cisco sold its set-top box business

In the last part of the series, we discussed why Cisco (CSCO) shut down its data storage business. Recently, Cisco also got rid of its set-top box business. Cisco sold it to Technicolor for $600 million. The company had acquired the business from Scientific Atlanta for $6.9 billion about a decade ago. During this period, Cisco made some prominent clients for its set-top box business. Its clients include pay-TV providers like Charter (CHTR) and Comcast (CMCSA).

However, things didn’t turn out like Cisco planned. The company’s SP (Service Provider) video segment includes the set-top box business. It has been experiencing a fall. As the above chart shows, this segment’s YoY (year-over-year) revenue growth rates continue to remain in the negative territory.

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Cisco was struggling in the cable broadband market

The main reason for Cisco’s fall in the cable broadband segment is its inability to hold onto its share in that market. According to a report from the Wall Street Journal, citing the market research firm IHS, Cisco’s share in the cable broadband market fell from 52% in 2013 to 29% in 2014. The chief beneficiary from Cisco’s loss in this market was Arris Group (ARRS). It was followed by Casa Systems. Currently, Arris Group is the leading player in this market. It has a share of 48%.

To get diversified exposure to Cisco, you can invest in the Technology SPDR ETF (XLK). XLK invests 3.60% of its holdings in Cisco.

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