Cisco brings down the curtain on Flip

HARDWARE MAKER Cisco will shut down its Flip video camera business and lay off 550 staff as part of the firm's plans to turn its fortunes around.

CEO John Chambers sent a memo to Cisco staff last week and followed it up with a frank analyst briefing where he outlined the failings of the networking giant and action plans for the future.

The first casualty of these plans is the Flip division, which Cisco announced will be closed down, while the firm will "support current Flipshare customers and partners with a transition plan".

It is unclear whether this transition plan will be a sale of the Flip business to another vendor or just continued support for the Flip software. Cisco could find it hard to find a buyer, given increased competition from devices like the Apple Iphone and Nokia N8 that offer HD video recording.

The news comes on the same day that Cisco was at the Gadget Show in Birmingham bigging up the potential for the Flip in the business market. When The INQUIRER asked staff at the Cisco stand to comment on the Flip closure, they said that they were aware that something was happening, but couldn't confirm the details.

Cisco acquired Flip maker Pure Digital Technologies in March 2009 for $590 million. The closure of the business is part of the company's strategy to "exit aspects of its consumer businesses and realign the remaining consumer business to support four of its five key company priorities". Cisco will now focus on core routing, switching and services, collaboration, architectures and video, although the video focus will be on video conferencing rather than handheld devices.

Hidden away at the end of the Cisco announcement was the admission that 550 jobs will be lost as part of the Flip closure, along with a charge to earnings of up to $300 million during the third and fourth quarters of fiscal 2011. µ