Just two years after Cisco spent $590 million on Flip camera maker Pure Digital, it announced plans to kill Flip today.
According to a release, Cisco will "close down its Flip business and support current FlipShare customers and partners with a transition plan."
Cisco CEO John Chambers sent out a memo last week saying the company had lost its focus by trying to attack too many businesses. To slim down the company and refocus itself, Chambers is gutting its consumer division which includes the Flip.
The Flip camera was a pretty neat gadget for a year or two, but video cameras are just about a standard feature on smartphones, not standalone gadgets. In five years it's hard to see the Flip as a big business for Cisco.
It is surprising that Cisco is just going to close down Flip instead of selling it. Seems like there must be some value in the brand.
Here's the full release announcing the move:
As part of the company's comprehensive plan to align its operations, Cisco today announced that it will exit aspects of its consumer businesses and realign the remaining consumer business to support four of its five key company priorities -- core routing, switching and services; collaboration; architectures; and video. As part of its plan, Cisco will:
- Close down its Flip business and support current FlipShare customers and partners with a transition plan.
- Refocus Cisco's Home Networking business for greater profitability and connection to the company's core networking infrastructure as the network expands into a video platform in the home. These industry-leading products will continue to be available through retail channels.
- Integrate Cisco umi into the company's Business TelePresence product line and operate through an enterprise and service provider go-to-market model, consistent with existing business TelePresence efforts.
- Assess core video technology integration of Cisco's Eos media solutions business or other market opportunities for this business.
"We are making key, targeted moves as we align operations in support of our network-centric platform strategy," said John Chambers, Cisco chairman and CEO. "As we move forward, our consumer efforts will focus on how we help our enterprise and service provider customers optimize and expand their offerings for consumers, and help ensure the network's ability to deliver on those offerings."
In connection with the changes to the consumer business, it is anticipated that Cisco will recognize restructuring charges to its GAAP financial results, with an aggregate pre-tax impact not expected to exceed $300 million during the third and fourth quarters of fiscal 2011. The charges will be disclosed in upcoming earnings conference calls and quarterly Form 10-Q filings. Additionally, the company expects this will result in a reduction of approximately 550 employees in the fourth quarter of fiscal 2011.
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