Cisco will shut down its Flip video camera business which it had bought for $590m in an acquisition in 2009. Over 550 jobs will face the axe as a result of the decision.
The move to retire the brand, which was a top seller in the US last year, is a first step of a wider strategy of CEO John Chambers towards reviving the company.
However, questions remain why the company chose to close the division instead of selling it off. Cisco spokeswoman Karen Tillman did not say why the company decided to shut down the Flip business rather than sell it.
Recently Cisco Systems chief Chambers admitted that his company had lost its accountability and needs more discipline to restore its credibility.
In a 1,490-word e-mail to company employees, he had asked them to be prepared for "tough decisions."
The last two quarterly results of the company were disappointing. In November, the company lowered sales growth projections. In February, it went for weaker margins.
The company has faced criticisms in the past of trying to do too much. Chambers had vowed in the internal memo to take "bold steps" to refocus and bring discipline.
He wrote, "Our growth strategy has been based on capturing the incredible opportunity afforded by this massive demand for the network. Many say that in the face of this expansion, Cisco needs more discipline. I agree."
Chambers had outlined 5 key areas for the company: routing, switching and services; collaboration; data center "virtualization" and "cloud" computing; architectures; and video.
"We are making key, targeted moves as we align operations in support of our network-centric platform strategy," Chambers had said.
