Cisco flips on video camera business in company shake-up

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Cisco flips on video camera business in company shake-up

Warwick Ashford

Cisco Systems has announced that it is to close down its Flip video camera business, confirming that its consumer division is a top target in the planned company revamp.

Investors called for the company to axe its low-margin consumer division after chief executive John Chambers announced plans for a company shake-up in early April.

The announcement comes just two years after Cisco acquired Flip-maker Pure Digital Technologies for $590m as part of a strategy to move into the consumer market.

Analysts said Cisco has moved faster than expected, which could mean that the company has been considering this for a while as part of plans to sell its consumer division, according to BBC news.

In further moves to regain ground, Cisco has announced that its high-end video conferencing Umi devices will no longer be sold directly to consumers, according to the Financial Times.

The company also plans to restructure its Linksys consumer networking business to boost profitability by combining its operations with other parts of Cisco.

Analysts and investors say a sale or spin-off of the consumer division would help Chambers achieve his goal of refocusing on areas where Cisco is a leader, such as the high-margin networking equipment that makes up about half of its revenue.

Closure of the Flip business will come at the cost of 550 jobs, which is likely to be only the start of job cuts as Cisco attempts to boost profits and regain investor confidence.

While the Nasdaq Composite has risen 15% in the past year, Cisco's share price has fallen 35% as the company missed sales targets and profits declined.

In his recent call to action, the Cisco chief told staff the organisation needs to refocus the business in the light of poor financial performance across the group.


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