Cisco Scraps Flip Video, Restructures Consumer Business (CSCO)

For all its hype on TV, YouTube (NASDAQ: GOOG), and the occasional award show, Flip Video is no more. As a part of the restructuring of its consumers business, Cisco (NASDAQ: CSCO) has announced that it will close down the division that makes Flip video.

Developed by Pure Digital Technologies (which was acquired by Cisco in 2009), Flip was initially considered a success story, garnering 13% of the camcorder market after its first year on the market.

Unfortunately, increased competition from cell phones and digital cameras – many of which now record HD video – made it difficult for Cisco to maintain Flip's success.

While the Flip division is being closed, Cisco says that it will support current FlipShare customers and partners with a transition plan, the details of which have yet to be announced.

Additionally, Cisco said that it will refocus its Home Networking business “for greater profitability and connection to the company's core networking infrastructure as the network expands into a video platform in the home.”

Cisco is also going to integrate its umi brand into the company's Business TelePresence product line “and operate through an enterprise and service provider go-to-market model, consistent with existing business TelePresence efforts.”

Further, Cisco said that it anticipates that it will “recognize restructuring charges to its GAAP financial results, with an aggregate pre-tax impact not expected to exceed $300 million during the third and fourth quarters of fiscal 2011.”

The charges, which will be disclosed in upcoming earnings conference calls and quarterly Form 10-Q filings, are expected to result in the reduction of approximately 550 employees in the fourth quarter of fiscal 2011.