Cisco's Flip closure: Is it ethical to destroy hundreds of jobs in a viable business?

Summary:Is it right for Cisco to shutter its Flip camera division without looking for a buyer? Hundreds of jobs will be lost in a market that analysts say is viable.

Cisco's recent sudden closure of its Flip video camera division will put nearly 600 people out of work and kill a $590 million investment.

Cisco could seek a buyer and save those jobs but it chose not to. Why not? Flip is in a market that is growing at 4.4 per cent compound growth a year for the next four years, according to market research firm IHS iSuppli. “The single-task device is becoming an endangered species,” said Jordan Selburn, lead analyst, consumer electronics, at IHS. But that doesn't mean that the value of the Flip division has disappeared overnight. Growth has slowed in the camcorder market from 6.1% in 2010, but it's still growing. And Flip holds the number one market position for its class of device. As Mr Selburn points out: “The market has not gone away...the value of a good product still remains strong.”

John Chambers, CEO of Cisco, is clearly dealing with a big problem: how to reposition the company and boost profits.

Selling Flip would do nothing to help Cisco; the money raised would be chump change compared to the billions of dollars in new business that Cisco needs to generate.

However, there is clearly an ethical issue here: 550 jobs have been dumped simply because they didn't fit in with Cisco's core strategy.

The problem wasn't that Flip wasn't making money but that Cisco's networking business is in trouble.

To flagrantly destroy so many jobs in a viable business is a cynical act of economic sabotage -- especially as the US looks to the tech sector for a much needed economic boost.

Has no one in the Obama administration contacted Mr Chambers and lodged a complaint?

Yes, selling Flip would do nothing to solve Cisco's long term issues, but it would save hundreds of well paying jobs, and support hundreds of families and their communities.

I would expect a captain of industry, as Mr Chambers clearly is, to show a more compassionate leadership.

And I bet that there are many others, who have followed his remarkable career and achievements, that would expect nothing less.

Take a look:

- CNN's Top 25 Most Powerful People
- Time Magazine's "100 Most Influential People"
- Clinton Global Citizen Award
- U.S. State Department Top Corporate Social Responsibility Award
- Woodrow Wilson Award for Corporate Citizenship
- 2009 Silicon Valley Education Foundation Pioneer Business Leader Award


Topics: IT Employment, Cisco

About

In May 2004, Tom Foremski became the first journalist to leave a major newspaper, the Financial Times, to make a living as a full-time journalist blogger. He writes the popular news blog Silicon Valley Watcher--reporting on the business of Silicon Valley.Tom arrived in San Francisco in 1984, and has covered US technology markets for leadi... Full Bio

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