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Linksys is taking more space at a time most networking firms are shrinking

Linksys Group Inc., an Irvine-based seller of computer networking devices for consumers, is quadrupling the size of its headquarters with a move to a recently refurbished building near John Wayne Airport.

The company, now in 30,000 square feet a few blocks away in Irvine, has signed a five-year, $4.2 million lease for a 120,200-square-foot building on Teller Avenue. Linksys is expected to move by August.

“We are totally short on space today,” said Victor Tsao, Linksys chief executive and co-founder. “It’s all about efficiency, but right now we’re simply running out of space.

Linksys expects to use most of the new building for production and the rest for its corporate offices. Linksys contracts with Taiwanese manufacturers to make its products but bundles and packages them here.

The new building gives Linksys room to grow, Tsao said. The company plans to hire as many as 100 more networking support, marketing and sales people by year’s end. That stands to bring Linksys’ head count to 300,an expansion that wouldn’t have been possible in the company’s older Irvine offices, Tsao said.

“Things like parking are real problems here,” Tsao said. “With the space inside we have, we can’t hire any more people. We don’t have the physical space for any more staff.”

Linksys sells high-speed modems, hubs, routers and other devices designed to let home and small-business users easily string together multiple computers and printers. While Cisco Systems Inc. and other big-name networking companies that sell to businesses are struggling, Linksys says it still is seeing growth in consumer sales.

The company’s sales topped $205 million last year, according to Tsao. This year, he said he projects revenue to surpass $300 million. Linksys has a 30% share of retail networking equipment sales, he said, with major retail outlets such as CompUSA, Radio Shack, Wal-Mart and Staples carrying the company’s products. The most popular item, Tsao said, is Linksys’ broadband router.

Though Linksys is flying higher than other tech companies right now, it still faces challenges, including falling personal computer sales. With Linksys’ networking products depending at least in part on sales of newer, faster computers, the company could see its own sales decline if the PC market doesn’t pick up.

Linksys made headlines earlier this month after it struck a deal to supply Internet telephony company Net2Phone Inc. with a device that allows users to make local and long-distance calls from anywhere there is a broadband Internet connection. Tsao says his company is looking at more deals in the coming months, but wouldn’t provide specifics.

Nearly all of the company’s manufacturing is done under contract in Taiwan,the homeland of Tsao and his wife, Janie, the company’s vice president of business development and co-founder. The two met while at Taipei’s Tamkang University. Both left comfortable computer systems jobs to start Linksys in 1988.

The Tsaos’ knowledge of the computer industry, coupled with their Taiwanese contacts, were the basis of Linksys’ storybook garage beginnings. Now the company is looking at expanding production to China, Victor Tsao said.

“We’re looking at a facility now,” he said. “If everything goes smoothly we should be opening that facility next year.” n

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