Cisco plans to shut its Flip camcorder business
In this Nov 4, 2009 file photo, a Cisco Systems’ Flip Video camera is displayed at Best Buy in Mountain View, Calif. (Photo: AP)
NEW YORK, United States
Cisco Systems Inc, the world’s largest maker of computer networking gear, yesterday said it is killing its Flip camcorder business as part of a reversal of years of efforts at diversifying into consumer products.
The about-face comes after several quarters of disappointing results and challenges in its core businesses. Analysts say the company has been trying to do too many different things.
A week ago, CEO John Chambers acknowledged the criticism, sending employees a memo vowing to take “bold steps” to narrow the company’s focus.
The San Jose, California, company yesterday said that it expects its consumer business shakeup will result in the loss of 550 jobs, or less than one per cent of its work force of about 73,000.
It also expects to take restructuring charges of no more than US$300 million spread out over the current quarter, which ends April 25, and the following one.
Cisco bought Pure Digital Technologies Inc, the maker of the Flip camcorder, for US$590 million in 2009, just two years after the San Francisco-based company made its first camera. It quickly became a top seller because of its ease of use. A signature feature, since copied by many other manufacturers, was a USB connector that flipped out of the case, letting the user connect the camera directly to a computer. The camera even contained video-editing software that fired up on the computer.
Cisco appears to see no point in selling the business — the announcement yesterday said Flip will be closed down. It will continue to support the sharing of Flip videos online.
The company said it will realign its remaining consumer business to support four of its five key priorities — routers and switches; corporate communications and collaboration equipment; servers for data centers and video.
That means it’s retrenching on another consumer video business — home videoconferencing. In November, Cisco started selling the umi, a US$599 box that turns a high-definition TV into a big videophone. But signs soon emerged that the umi wasn’t doing well. It cut the price of the unit in March, along with the monthly service fee, which went from US$24.95 per month to US$99 per year.
On Tuesday, Cisco said it will fold umi into its corporate videoconferencing business and stop selling the box through retailers. Instead, it will sell it through corporate channels and Internet service providers.
Cisco’s Home Networking business, which makes Wi-Fi routers and has the 2003 acquisition of Linksys at its core, will be “refocused for greater profitability,” but Cisco will keep selling the routers in stores.
Cisco shares rose two cents to US$17.49 in morning trading. The shares are still close to their 52-week low of US$16.97, hit a month ago.
