Consumer cull for Cisco

Networking mega-vendor drops Flip as part of major consumer shake-up

Networking giant Cisco is taking a scalpel to its consumer operations and is bracing for a $300m bottom-line hit as it sheds 550 staff.

The vendor announced today that it is axing its Flip video business, which it acquired in 2009. Users and providers of FlipShare technology will be provided with a transition plan, said Cisco.

The vendor also plans to more tightly align its Home Networking unit to its core network infrastructure products, although it stressed that consumer wares will still be sold through retail channels. Cisco's umi home video offering is to be given a new home in the Business Telepresence product range. It will be brought to market through the same enterprise and service provider routes to market that currently fulfil Telepresence sales.

Cisco has also announced it will be re-examining what the market opportunities are for its Eos software platform and whether it can be integrated with core video technologies.

Today's changes are to result in about 550 employees losing their jobs in Cisco's fourth fiscal quarter. The firm also expects restructuring charges of up to $300m (£184m) to hit its pre-tax earnings for the year.

The shake-up of Cisco's consumer operations is part of a wider plan to revamp the business as a whole. Last week, a strongly worded message from chief executive John Chambers told employees that Cisco has "lost credibility" as a result of poor strategic execution.

Today, Chambers (pictured) added: "We are making key, targeted moves as we align operations in support of our network-centric platform strategy. As we move forward, our consumer efforts will focus on how we help our enterprise and service provider customers optimise and expand their offerings for consumers, and help to ensure the network's ability to deliver on those offerings."