Cisco plans to shut its Flip camcorder business

BY PETER SVENSSON, AP Technology Writer

NEW YORK (AP) — Cisco Systems Inc., the world's largest maker of computer networking gear, on Tuesday said it's 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 said Tuesday that it expects its consumer business shakeup will result in the loss of 550 jobs and restructuring charges of no more than $300 million in the current quarter, which ends April 25, and the following one.

Cisco bought Pure Digital Technologies Inc., the maker of the Flip camcorder, for $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 Tuesday 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.

Cisco shares rose 8 cents, or 0.5 percent, to $17.55 in pre-market trading. The shares are still close to their 52-week low of $16.97, hit a month ago.