the Flip products contributed about 1.3% to their revenue according to their 2010 10K filing. by the time you subtract out cost of goods + SG&A, that 1.3% is barely noticeable in their operating profit. then deduct depreciation/amortization/interest/tax... it's like a drop of rain in the ocean.
a divesture hinges on these factors:
- how much they can sell it for
- how much it would cost to sell it
- who would buy it
not sure which tech company would repeat Cisco's mistake in buying a company that's marginally related to their core business. but sure, let's say someone bites. which companies off hand would have $0.7 bn (assuming it can still fetch the same price) in cash to spend in current times? the three that come to mind would be Apple, Google and Microsoft. all of them are completely focused in the mobile industry right now. however let's say one of them does want to buy, what costs do Cisco incur? they'd have to hire an investment bank to sell Flip and a law firm to advise on legal issues... neither of which come cheap.
video recording is not my forte so i'll go with the suggested opinion that there is a small portable camcorder market out there. Kodak, as mentioned, seems to be a powerhouse in this segment. their stock is at $3.32, a negative EPS, negative operating income for the past 3 years, negative net income for the past 3 years and negative free cash flow for the past 3 years. Kodak can not turn a positive EBIT, nevermind NI or FCF, with a 17% market share in this segment. going by the logic that market share = profitability, then it seems awfully strange that the #2 player is now ending up to be a likely buyout candidate.
back to the original question at hand of selling Flip.
the logical buyers would be in the consumer imaging industry due to likelihood of product diversification, economies of scale/scope and new target demographic. however, the opportunity cost for these companies to create a competing product (Sony Webbie) is next to nil... they already have optics, they already have sensors, they already have existing supply chains/product channels etc etc etc. it's cheaper for them to make their own "Flip" than to buy it. i really think the Asian firms would be a good buying candidate except they'd probably have to take on a significant amount of debt to complete a $0.7 bn transaction. everything i know about Asian business culture is that they are pretty conservative when funding projects with debt capital.
this is just my own analysis based on Cisco's and Kodak's annual reports. though honestly, i'm pretty sure Cisco tried to shop Flip around before closing it down... i would if i were CEO
never know if you'd get lucky and find a buyer willing to pay through their nose!
First and most importantly, if any of those were a concern and they wanted to exit the portable camcorder market, they could've sold the business instead of kill it. I could understand killing a losing venture. The Flip, on the otherhand, was actually successful. Even if Cisco wanted to go back to their roots, killing it makes no sense financially, especially when there are companies in Silicon Valley who would've been in line to buy it.
The Flip owned 30% of the portable camcorder market in 2010. It was profitable and went head to head with Kodak (17%) as the leaders in that market. The rest of the manufacturers you listed, camcorder experience or not, budget or not, were trying to get in. Except for Nikon and Olympus, which to my knowledge, focus entirely on cameras and don't make pocket camcorders.
The whole thing about smartphones pushing out portable camcorders is exaggerated too. There's still plenty of shelf life for ultra compacts. I have an iPhone 4 which can't even do 720 @ 60 fps. Meanwhile, the sub $150 camcorders can do 1080p recording, have face recognition, can be mounted on tripods, can be shockproof/waterproof/dustproof, and can do macro or wide angle recording out the box. One day we'll all go to cloud storage but until then, plenty of physical media companies will still be around because there's money to be made. Same thing with pocket camcorders. Cisco should've acknowledged this and if they didn't want to capitalize on it, they should've sold the division instead of eating its value and laying off 550 workers.