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Cisco Gives Up on Flip

Cisco (NASDAQ:CSCO) announced today that it is restructuring its consumer business, ending some product lines and consolidating others. The overall goal is to re-focus Cisco on its core corporate priorities of routing, switching, collaboration and enterprise video.

Cisco will be taking a pre-tax charge of $300 million in connection with the restructuring and it also expects to layoff 550 employees.

The biggest change is for the Flip digital video camera business which is being closed down. Cisco acquired Flip as part of its acquisition of Pure Digital Technology in March of 2009 for $590 million.

Cisco's umi home TelePresence unit is also being affected by the restructuring. Umi was announced in October of 2010 as Cisco's entry point into consumer telepresence systems. Cisco's original plan was to make the umi available through retail channels including electronics retailer Best Buy.

The umi will now be integrated into Cisco's enterprise TelePresence portfolio and will be offered via Cisco's enterprise and service provider go-to-market model.

Other components of Cisco's consumer business are also being examined. The Cisco Eos media platform is one such platform that Cisco is now set to figure out how to better integrate into other elements of its enterprise business.

Cisco has also pledged to refocus its Home Networking business for greater profitability. As well, moving forward Cisco wants there to be a closer connection between Home Networking and its core networking 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 in a statement. "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."

At least one analyst is positive on Cisco's consumer restructuring.

"We believe that Cisco's announcement to restructure its consumer business will be applauded by the market this morning," Brian White, analyst at Ticonderoga Securities wrote in a research note. "The Street never fell in love with Cisco's consumer strategy and the Flip product line was the epitome of this disdain."

White noted that Cisco's consumer business had experienced a 15 percent year-over-year decline for Cisco's second fiscal quarter of 2011.

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.