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

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.

TOPICS: IT Employment, Cisco

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

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

    People who actually knew about video & camera tech, as well as the overall market, went "Ummm, no...." to the widespread clueless claim that smartphones killed the Flip, and instead looked at what Cisco did with Flip after they took it over -- in a word, squat. Did they make a sport model like other competitors? No. Did they add a model with an external mic jack, like what Kodak did to good effect, and which had been asked for by a good many of their users? No. Did they ever add 1080p resolution like all their major competitors had for sometime, and which YouTube supported for a while as well? No. Did they support adding storage via SDHC memory cards like their competitors? No. Did they actually do anything to improve the basic functionality and performance of the Flips? No. What did they do? Let users personalize the case design, big friggin whoop. Could they have sold Flip to another company? Probably in a heartbeat. So what is up with Cisco? They are basically a router company and anything else they are involved is no more than a casual hobby. And the impression that they are a nicer company than, say, the likes of Microsoft, has gone by the wayside with their overall behavior here.
  • John Chambers is a greedy moron

    this dude is running cisco into the ground by sabotage and cluelessnes.
    Linux Geek
  • Spare us!

    This article is like something out of <I>Atlas Shrugged</i>. You want the frigging <b>government</b> getting involved in this? Here's news: Cisco is not public property. The people who do own it have appointed -- for better or worse -- a management team that they apparently trust. If you do not like their decisions, you are free to say so but you are most certainly not free to insert your {}#% government into the workings of somebody else's company.<br><br>The leftist politics on this website is getting out of hand. When you aren't celebrating the activities of Greenpeace, you're running press releases from George Soros. And now this: get the Obama Administration involved in allocating somebody else's resources. Please stop this. ZDNet advertises itself as a tech site, and that's why people come here. They don't come to hear the latest leftist crusades.
    Robert Hahn
    • RE: Cisco's Flip closure: Is it ethical to destroy hundreds of jobs in a viable business?

      @Robert Hahn

      I think you miss the point that corporations require oversight. Unless you want 8 year olds working in coal mines, your environment to be full of heavy metals, and your food to be toxic, the government does have a role in regulating private business.

      This is an argument that's been going on since the founding of the country and you're on one side of it. Both sides have merit, but the fact is the "right" amount of government intervention is somewhere between socialism and the laissez faire ideals the tea party espounds.

      I don't agree the administration should get involved in this, but pretending basic worker's rights is some left wing socialist movement is borderline insane. Do you honestly think multinational corporations would sacrifice profit on moral or ethical grounds? Do you want to live in a world where corporations can do anything they want as long as they make money?
      • RE: Cisco's Flip closure: Is it ethical to destroy hundreds of jobs in a viable business?

        @crazydanr@... It's interesting that in order to defend a suggestion that the government intervene to force a private corporation to continue in a business that its duly-appointed management wishes to exit, you found it necessary to trot out horror stories about child labor and heavy metal pollution ( such as playing Black Sabbath records at high volume). These are not remotely comparable.

        "Basic workers' rights" do not include the right to spend other people's money, to substitute their self-serving judgment about which jobs should exist, or to demand that their services be purchased by others. Governments which would enforce such "rights" are not governments; they are tyrannies.
        Robert Hahn
      • RE: Cisco's Flip closure: Is it ethical to destroy hundreds of jobs in a vi

        @Robert Hahn

        "It's interesting that in order to defend a suggestion that the government intervene to force a private corporation to continue in a business that its duly-appointed management wishes to exit...."

        No, what is interesting is that you set up this straw man argument that does not even bear a CASUAL similarity to that put forward by the O.P..
        At no point did ANYONE suggest that Cisco be compelled to remain in this business.
    • RE: Cisco's Flip closure: Is it ethical to destroy hundreds of jobs in a viable business?

      @Robert Hahn: I agree completely that the Flip IS now Cisco's to do with as they please and that the government has no role in this issue.

      I think my one criticism of the 'Randian ' philosophy of Objectivism (and capitalism is general) is the lack of consideration of ethics/morals. As a check/balance, individual success should be tempered by a consideration and mitigation BY THE INDIVIDUAL of the impacts of their actions on the community (i.e., it is the moral responsibility of the individual to not be evil). The challenge, of course, lies in the objectivity of the assessment (and the assessor) of 'evil'...

      One of the sad ironies of life is that "the right thing to do" and "the most profitable thing to do" rarely align.
      • No one knows the right thing to do.

        @chipbeef The problem is that as humans, we do not know the future in advance. We therefore do not know whether selling the Flip business would result in more jobs or fewer. If someone buys the Fip business, they will use money that might have started something else, which might in the long run have proven much more beneficial. We simply don't know. We also don't know that the buyer of the Flip business wouldn't immediately lay off 60% of the staff and fold the rest in with whatever they have now.

        Quite frequently these appeals to "ethics" are in actuality a desire to substitute one person's judgement for another in the name of "I want to be in charge," when there's no reason to believe that he-who-wants-to-be-in-charge knows any more than whoever is doing it now. All we know for sure is that he-who-wants-to-be-in-charge cloaks himself as someone with a Higher Purpose. Politics 101, I suppose.
        Robert Hahn
    • RE: Cisco's Flip closure: Is it ethical to destroy hundreds of jobs in a viable business?

      @Robert Hahn Oh God, more of the Libertarian rhetoric. The Libertarian hypothesis has been disproven quite some time ago. There was a big field experiment - it was called SOMALIA. "No government" has produced not so much paradise but pirates and poverty.

      Just like you, a company is a citizen of the country. The government is We the People. If something a company does affects the community and/or the country (like losing 550 more jobs in the Great Recession) then yes, you do have to think of someone besides yourself and answer to the rest of us. If the corporation would like to give up its legal standing as a person, we can talk, but otherwise it has responsibilities as well as privileges.
      • It's called &quot;gray&quot;

        @jgm@... What is this deal with "no government." You're the second guy to try to sell the proposition that a government that cannot tell a company to stay in a business it wants to exit must either entirely disappear, allow child labor, or worse.

        You know better. Stop.
        Robert Hahn
      • Silly, just silly


        No, not even close. How embarrassing for you. Somalia is an example of anarchy, not libertarianism. Learn your terms.

        According to your logic, you can't let the kid mowing your lawn go if you decide to mow the lawn yourself - you owe him the job. And yes, I'm being very generous in using the word "logic" when describing your point.
    • How bout sparing us your childish rants?

      @Robert Hahn - We could call you a right winged idiot, but instead, mature adults prefer to argue the merits of each issue and to avoid calling their opponents 'leftists" or other silly names. As others here have pointed out, government intervention in the private sector has been going on since before we had a transcontinental railroad. More relevant, perhaps, is DARPA - ever heard of that? The fact that you are reading this message is thanks in part to that government agency. So spare us your ideology and try thinking for a moment: PERHAPs the execs at Cisco have missed something and actually might both enhance their shareholders' fortunes AND make the lives of Flip employees easier by trying to find a buyer for the operation, either on the outside or within Flip itself. And PERHAPS a government who is looked at to preserve our job base has a role in facilitating such a move.
      • How about an inversion?

        @DavidL98 Oh come on, "leftist" is hardly a silly name. It's a badge of honor worn by many. The reason for my comment is that this website's bloggers seem to be increasingly bringing us news from people and organizations commonly associated with radical leftist politics. It's their right to do that, but it seems odd when the focus of the site is advertised to be technical subjects, as opposed to "stories about leftist causes with a technical hook." I frankly come here in part as a respite from politics, and wish it would be kept far away from here.

        The kind of micro-meddling you're talking about is not part of our Great History of regulation, or of Defense Research, or indeed of anything. It's an appeal to mob rule, and little else.

        If the execs at Cisco have missed something, there is already a mechanism in place to hold them accountable, and it does not and need not involve the government. In the meantime, no one knows whether diverting money from something else into the purchase of the Flip division will bring more jobs or fewer. For all you know, selling the division will reduce the number of jobs by preventing investment in something else that was more promising.

        The people running the place work these problems every day. Let them do it. The claim that you know where we can get smarter guys who know the future in advance is thoroughly unconvincing.
        Robert Hahn
    • Message has been deleted.

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

      @Robert Hahn
      Please, this is silly. The suggestion was that someone in government should make a phone call! A phone call is not incipient socialism. Jawboning is an old term. It is merely the application of social pressure by means of a statement by a government official. Even then the phone call was not suggested until paragraph 11, nor was it mentioned again after.

      That is all this article is about, applying social pressure. Surely Libertarians are not trying to eliminate social pressure to conform to societal norms are they?
  • If the business was so viable, why do you have to

    shop for a buyer? If the market for this product is so hot, then all those people who lost their jobs will quickly find work with other companies making similar products.
    • Re: If the business was so viable, why do you have to

      @frgough@... Get real. If another company that is competing against the flip is doing well, and looses a competitor, they will not be in a position to add jobs. in fact, they could also let some employees go. Competition enhances the economy. Less competition, less jobs and less innovation. Do not pretend that you really think the other manufacturers of this particular widget will scoop up employees just because they are there.
      The top minds will get jobs, if Cisco was stupid enough to even include top minds in the 600 that it cut. More likely, they cut 600 less skilled workers who will not be needed at the other companies. The other companies probably DONT EVEN HIRE WORKERS in AMERICA.
      • So, when a competitor goes out of business in a thriving

        market, all the people wanting to buy the product simply decide that not only won't they buy the product, they'll persuade their friends not to buy it too so that total sales in the space decrease, resulting in a chain reaction layoff among all companies in the space.

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

    The answer to the question is no. The shareholders of Cisco, through their elected board of directors and officers, can do what they wish with the company they own.

    If actions by the officers and board in closing down Flip were antithetical to the interests of the shareholders, that might be unethical, or it might just be a bad business decision for which the shareholders may fire management.
    • RE: Cisco's Flip closure: Is it ethical to destroy hundreds of jobs in a viable business?

      @rshol So as long as an action makes money for shareholders it's ethical? You're confusing "profitable", "legal" and "ethical".