Cisco (CSCO) Has Another Misstep, Looks to Unload Flip Business
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Cisco (Nasdaq: CSCO) reported it plans to shutter its Flip business and consolidate the balance of its consumer business in order to drive more growth in that segment.
Some keen observers will note, however, that just two-years ago, on March 19, 2009, Cisco announced they acquired Pure Digital Technologies, creator of the Flip Video brand.
Even its vast design gallery wasn't enough to save the brand, which touted ultraHD picture quality.
Cisco acquired the brand for $590 million in stock. At the time, Cisco announced it was aiming to retain key employees with an additional $15 million of incentives.
Today's announcement is costing Cisco $300 million pretax on a GAAP reporting basis, not to mention the jobs of 550 employees.
But the end may have been near for the device even before Cisco picked it up. Companies like Apple (Nasdaq: AAPL), Research in Motion (Nasdaq: RIMM), HTC, Motorola (NYSE: MMI) and others, were all integrating HD camera capabilities into smartphones and tablets.
For instance, latest offerings from HTC -- namely the Thunderbolt -- has an 8-megapixel camera attached to it, producing 1280x720 (720p) photos and videos, on par with what Cisco's Flip was capable. The Thunderbolt (along with many other devices on par) also runs applications, makes calls, surfs the Internet, has GPS, and more.
Today's decision puts additional pressure on CEO John Chambers, who has come under fire lately following several quarters of lackluster performance out of the tech giant, and appears to be late to the game on every plane save for Enterprise Software.
Cisco shares are now down 0.4 percent in morning trade Tuesday.
Some keen observers will note, however, that just two-years ago, on March 19, 2009, Cisco announced they acquired Pure Digital Technologies, creator of the Flip Video brand.
Even its vast design gallery wasn't enough to save the brand, which touted ultraHD picture quality.
Cisco acquired the brand for $590 million in stock. At the time, Cisco announced it was aiming to retain key employees with an additional $15 million of incentives.
Today's announcement is costing Cisco $300 million pretax on a GAAP reporting basis, not to mention the jobs of 550 employees.
But the end may have been near for the device even before Cisco picked it up. Companies like Apple (Nasdaq: AAPL), Research in Motion (Nasdaq: RIMM), HTC, Motorola (NYSE: MMI) and others, were all integrating HD camera capabilities into smartphones and tablets.
For instance, latest offerings from HTC -- namely the Thunderbolt -- has an 8-megapixel camera attached to it, producing 1280x720 (720p) photos and videos, on par with what Cisco's Flip was capable. The Thunderbolt (along with many other devices on par) also runs applications, makes calls, surfs the Internet, has GPS, and more.
Today's decision puts additional pressure on CEO John Chambers, who has come under fire lately following several quarters of lackluster performance out of the tech giant, and appears to be late to the game on every plane save for Enterprise Software.
Cisco shares are now down 0.4 percent in morning trade Tuesday.
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