What About the Flip?

By Reuters  |  Posted 2011-02-28 Email Print this article Print
 
 
 
 
 
 
 

Critics are starting to wonder if Cisco may be better off focusing on its networking core and shedding some of its non-core businesses such as the consumer camcorder Flip, the Cius tablet project, or even the lower-end Linksys router line.


Some say that Cisco may even be regretting its $590 million acquisition of Flip videocamera maker Pure Digital in 2009, and could sell or cut investment in the unit.

The Flip camera has become the most popular pocket camcorder in the United States, with a simple design and easy-to-use software for uploading photos. But it competes with devices made by Sony Corp (T:6758) as well as video-capable smartphones.

Critics also say the Flip camera is starting to look old. Unlike corporate routers and switches, consumer products require frequent improvements to stay fashionable --something companies like Apple and Sony have more experience with.

A day after its quarterly report, Cisco said the head of its consumer business group and former Pure Digital CEO Jonathan Kaplan was leaving.

Chambers said he doesn't regret the company's expansion. Since he took over as CEO in 1995, Cisco's annual revenue has grown from around $1 billion to $40 billion last year.

"The only criticism I would have is, we should have prioritized... And what we have to do is take resources and realign them," he said on a conference call with Bank of America Merrill Lynch analysts last week.

With over $40 billion in cash, Cisco is still expected to look for deals. But investors are hoping for more prudence -- fewer deals like PostPath and Pure Digital and more like wireless technology firm Starent and online conference WebEx.

Capital Advisors' Smith saw opportunities for Cisco to invest in technologies like smart grid, or utilities systems that are connected to the Internet, and increasingly popular cloud computing technologies that allow users to cut hardware and energy costs.

But he added investors will take a close look at any purchases ahead.

"You'll probably see something, probably in the next 6 to 12 months. But with their mixed record, investors are going to scrutinize acquisitions going forward."



 
 
 
 
 
 
 
 
 
























 
 
 
 
 
 

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