On Tuesday, Cisco said it will fold umi into its corporate videoconferencing business and stop selling the box through retailers. Instead, it will sell it through corporate channels and Internet service providers.
Cisco's Home Networking business, which makes Wi-Fi routers and has the 2003 acquisition of Linksys at its core, will be "refocused for greater profitability," but Cisco will keep selling the routers in stores.
Cisco shares fell 3 cents to close at $17.44 Tuesday. The shares are close to their 52-week low of $16.97, hit a month ago.
Analyst Simon Leopold at Morgan Keegan said the pullback on the consumer side is a good thing for investors, but not enough to set off a stock rally.
Consumer products have been a drag on Cisco's results because they carry profit margins that are far lower than the big-ticket capital equipment the company sells to corporations and governments, Leopold said. But the drag has been minor, because consumer products are still only a small part of Cisco's overall business.
Last year, the Flip Video was still the top-selling video camera in the
, with 26 percent of the market, according to IDC analyst Chris Chute. But that only amounted to 2.5 million units sold. Dedicated video cameras are small potatoes compared to digital still cameras and smart phones, both of which now shoot video. U.S.
Top competitors in the pocket camcorder field, which could benefit from Flip Video's demise, are Eastman Kodak Co. and Samsung Electronics Co. Rubin expects Kodak to pick up much of Cisco's market share.
Leopold said the performance of Cisco's corporate products has been a bigger factor for investors than the consumer business. He believes the selling is overdone because its market share losses are mainly in fringe products rather than bread-and-butter routers and switches.