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The company plans to close for four days as part of its plan to reduce expenses by over $1 billion in fiscal 2009, which was disclosed during its Nov. 5 earnings call. Cisco is looking to shave that amount from expenses in an effort to meet its internal budget during times of economic strife.
"Cisco will be targeting reductions in travel and discretionary-related expenses, including offsites, outside services, equipment, events, trade shows, prototypes, marketing and other activities," a Cisco spokesman stated in an e-mail to Network World. "As part of this effort, Cisco will implement a mandatory year-end shutdown of the U.S.-Canada theater from Dec. 29, 2008, through Jan. 2, 2009, with some exceptions for targeted business-critical teams including technical assistance services and channel partner and customer product ordering services."
Shuttering facilities and operations during that time will help lower payroll and facility expenses, according to a bulletin issued this week by investment firm UBS. Observers also note that, should Cisco lay off workers, it could pay out less in accrued vacation time.
UBS says Cisco's aim for savings greater than $1 billion should provide a "cushion."
"We believe it is prudent for Cisco's management team to plan for cushion in the event of weaker than expected revenues," states UBS analyst Nikos Theodosopoulos in the bulletin.
Theodosopoulos states that calendar 2009 visibility remains low, and UBS channel checks indicate end market demand remains soft.
"We continue to view revenue guidance of down 5% to 10% for the current quarter as realistic," he states.
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