Cisco Systems’ (CSCO) shares dropped more than 6% during today’s trading session, after the networking giant said it would shut down most of its U.S. and Canadian business for five days, from Dec. 29 through Jan. 2, as part of the co.’s previously announced plans to cut costs. Cicso made the cost-cutting announcement on Nov. 5, after it warned that revenue could fall as much as 10% in the current quarter given the challenging macroeconomic environment.
Cicso’s shutdown however, will exclude critical company operations such as teams of technical assistance, channel partner and customer product ordering services.
UBS analyst Nikos Theodosopoulos said in a research note: “We believe it is prudent for Cisco’s management team to plan for cushion in the event of weaker-than-expected revenues.” The analyst also said he thought Cisco was likely aiming for more than the planned $1 billion in cost cuts. Reuters
Cisco’s move imitates a longstanding Sillicon Valley practice. During the dot-com bust many companies would shut down during the last week of the year to save more on energy and other business related expenses. The San Jose, Calif.-based co. said in its release that having a cost control focus at this time “is appropriate while still providing our partners and customers with critical services over the holiday period.”
Cisco shares were down $1.02, or (6.22%) at $15.38 on 69 mln average volume. CSCO has fallen more than 40% from the start of fiscal ’08.