Cisco to close Flip video camera business, cut 550 jobs

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SAN JOSE, Calif.Cisco Systems
said it will close down its Flip video camera business and cut 550 jobs
as it attempts to boost its faltering stock by focusing on a smaller
number of business priorities.

The company announced the moves just weeks after CEO John Chambers told employees and analysts that he was examining Cisco’s
operations and would make difficult but “targeted” decisions to get
back on the right path. Many analysts had been expecting the changes
would affect Cisco’s consumer division, which reported lagging sales in the last quarter.

Cisco is one of Silicon Valley’s
largest tech companies and has more than 70,000 employees. It is
profitable overall, but has seen its stock price flounder at two-year
lows after recent earnings reports and forecasts were lower than Wall Street
expected. The company dominates the market for computer networking
gear, such as routers and switches, but in recent years has expanded
into numerous other businesses, leading some critics to say it has lost
focus.

San Jose-based Cisco
also said it will move its home videoconferencing system into the unit
that sells similar and higher-end systems for business. The company
said it is examining other business elements, including its home router
products.

“We are making key targeted moves as we align
operations in support of our network-centric platform strategy,”
Chambers said in a statement Tuesday.

Cisco began
selling Flip digital cameras, which have been praised for their simple
design and ease of use, after buying camera maker Pure Digital for $590 million two years ago. Cisco
did not indicate that it will try to sell the business; instead the
company said it will “close down” the business and support current Flip
customers with a “transition plan.”

Cisco said the job cuts will occur later this year and will cause the company to recognize up to $300 million in restructuring charges. It did not provide more details on the cuts.

One investment analyst, Brian Marshall of Gleacher & Co.,
called the moves “a step in the right direction” but noted that they
may not have a major impact on the company’s finances as a whole.

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