26
April
2011
|
10:23 PM
America/Los_Angeles

Flip Closure: Is It Ethical To Destroy Hundreds Of Viable Jobs?

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

Market research firm IHS iSuppli today released its analysis of the move, calling it "shrewd" but said Cisco missed out on selling a valuable business.

"The single-task device is becoming an endangered species," said Jordan Selburn, lead analyst, consumer electronics, at IHS.

While shipment growth will rebound somewhat in 2014 and 2015, the market will expand at a relatively anemic compound annual growth rate of 4.4 percent from 2010 to 2015.

Although growth has slowed, the market is growing. There is nothing to indicate that the value of the Flip business has dissipated.

Flip holds the number one spot 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."

Foremski's Take:

John Chambers, CEO of Cisco, is 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, within a viable business, have been dumped simply because they didn't fit in with Cisco's core strategy.

Corporate raiders in the 80s would buy up large businesses and strip their assets and lay off thousands, and even save some jobs in a leaner organization -- and make a lot of money.

Cisco isn't interested in doing anything with Flip except closing it down.

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.

I'm surprised that no one in the Obama administration has contacted Mr Chambers and lodged a complaint.

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

It's reasonable to expect that 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