Cisco announced this morning that it would discontinue its Flip camera division and layoff 550 employees by the end of 2011.
The decision to cast off Flip was not unexpected. Last week, CEO John Chambers made news by announcing that the company would have to make substantial changes to get its business on track.
"It was anticipated," said Jim Kelleher, director of research and senior analyst at Argus Research. "Aspects of the other consumer products are all at risk in short order if they can't make it into a more profitable business."
Other recent consumer acquisitions include Linksys home routers, which have fared relatively well, cable set-top box maker Scientific Atlanta, and Webex web-conferencing software.
"Cisco's going to take a microscope to its entire organization and make some changes and that's a good thing, that's what they need to do," Brent Bracelin, senior analyst at Pacific Crest Securities said last week.
The company has 72,935 employees and says it will cost $300 million to complete the restructuring. (FINS)
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