Cisco has announced today that they’ll be axing their Flip camera division in an attempt to refocus their energy on their network business.
The popular handheld video device has only been on the market for five years, but once companies began including video cameras into their cellphones, many thought Flip’s days were numbered. Two years ago Cisco spent a whopping $590 million to purchase Pure Digital, makers of the Flip Camera. Today, it’s dead.
Cisco didn’t mention specifics about why they were planning on closing down Flip instead of selling it off, but they did articulate that users of the FlipShare service would still be supported through a “transition plan,” but they did fail to elaborate on exactly what that means.
Here’s the Press Release
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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