It was something inevitable, just a matter of time. Network infrastructure giant CISCO announced this morning it was in the process to end operation at its Flip Video business, thus cease production of the Flip Cam. In an effort to “realign” its core business, CISCO will ax about 550 employees and a loss of $300 million, take into consideration that it brought Flip’s original creator, Pure Digital Technologies, for $590 million back in 2009. Originally a part of CISCO’s grand plan to create a network-centric strategy with Flip leading the charge on the consumer side, things never came in fruition once cellphones like Apple iPhone 4 started incorporating HD video sensor. Goodbye Flip, we will all miss your help in capturing those quirky moments for us.
Cisco Restructures Consumer Business
SAN JOSE, CA–(Marketwire – April 12, 2011) – As part of the company’s comprehensive plan to align its operations, Cisco (NASDAQ: CSCO) 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.