Cisco shutting down between holidays to save money

Cisco is reportedly shutting down during the year-end holiday season to save money, the first time it has done so in its history.

A bulletin issued this week by investment firm UBS states that Cisco plans to close for four days as part of its US$1 billion savings plan for 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.

Sources say Cisco plans to shutter facilities the week between Christmas and New Year’s Day. Cisco was not immediately available for comment.

Shuttering facilities and operations during that time will help lower payroll and facility expenses, the UBS bulletin states.

Observers also note that, should Cisco lay off workers, it could pay out less in accrued vacation time.

UBS says Cisco is actually aiming for savings greater than $1 billion during the fiscal year.

“Our checks suggest Cisco is likely aiming for greater…savings from the opex reduction plan,” states UBS analyst Nikos Theodosopoulos in the bulletin. “We believe it is prudent for Cisco’s management team to plan for cushion in the event of weaker than expected revenues.”

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 per cent to 10 per cent for the current quarter as realistic,” he states.

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Jim Love, Chief Content Officer, IT World Canada

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