Cisco kills Flip camera in first revamp step

Everyone was surprised when Cisco announced the decision to shut down Flip. Why shutting it down?! Why not selling it? This shows the pressure on Chambers to cut down a money-losing company, who also includes Scientific Atlanta and Lynksys routers.

In 2009, Cisco bought Flip for 590 million dollars. This acquisition was made to build a much stronger consumer business. Cisco’s investors were disappointed because of its descent from Internet powerhouse earlier this year. Kim Caughey Forrest, the senior analyst at Fort Pitt Capital declared “I’m really disappointed if this is it. One would hope that there are more changes pending.”

Also, the company had a plan to cut 550 of 73.000 jobs in the third and fourth quarter of fiscal year (2011) to take a pretax charge of 300 million dollars. Chambers wants to restructure Cisco by leaving a memo to his employees explaining the problems. In the memo Chambers said the Cisco had lost its way.

Karen Tillman, the spokeswoman at Cisco didn’t say why the company is killing Flip and not selling it. The analyst at Atlantic Equities Philip Alling said that the reason why Cisco is not selling Flip it’s because there are no buyers: “It’s disappointing they wouldn’t be able to generate any proceeds from a sale of the business.”

NPD (market research firm) said that last year in US Cisco sold 23 percent of all camcorders, and this was excellent because they were ahead of Sony Corp’s and Eastman Kodak (22 percent for Sony and 12 percent for Kodak).

Twitter was full of news about “killing Flip” and it was the day’s most discussed topic. One user even said “Too bad. I still love my Flip”.

Too bad for Flip, indeed. It seems that every good thing must come to an end.