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Cisco killing Flip line of camcorders, axing 550 employees in restructuring effort

Tim Stevens
04.12.11
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Oh Flip, how far you've come. And, of course, how far you've fallen. Once a spunky upstart with oddly shaped camcorders, you got snapped up by Cisco in Spring of 2009 for a hefty $590 million in stock. Now, according to Pocket-lint, you (and your moustaches) are done for. Cisco CEO John Chambers says the brand is being dispatched as the company refocuses, done in by the proliferation of high-definition sensors into smartphones and PMPs and the like. We had been waiting for the company's next products (if you'll recall, a WiFi-enabled Mino HD hit the FCC just a few months back), but at this point, it looks like those hopes and dreams will remain unfulfilled. We're awaiting comment from the company, and will update as it flies in.

Update: Looks like the "exit of some consumer operations" will lead to 550 employees being left out of work. If you'll recall, the outfit reported in February that sales of consumer products sank 15 percent, while profits slipped 18 percent as margins slid for a fourth consecutive quarter. Meanwhile, Umi will be integrated into the company's TelePresence product line and operate through an enterprise and service provider go-to-market model. In other words, Skype just ate Umi's lunch.

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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.

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