Cisco Systems Inc. will close most of its U.S. and Canadian offices for 4 days over the holidays as part of a plan to cut $1 billion in costs in the current fiscal year, the company said Tuesday.
The shares fell 6 percent on fears that the move shows demand for Cisco's computer networking equipment remains sluggish, forcing the company's first mandatory shutdown in over a decade. The San Jose, Calif.-based company is forecasting that sales will fall 5 percent to 10 percent in the current quarter as the credit crisis strangles spending by corporations.
Cisco wouldn't say how many employees will be affected by the closure or how much money it will save because of the decision.
Many Silicon Valley companies have traditionally shut down over the holidays when business is slow and employees are on vacation. Some are now extending those closures, or revisiting a practice long since eliminated, in a bid to save money in a rocky economy.
Workers are usually either given paid days off or are asked to take unused vacation days.
Hewlett-Packard Co., for example, now plans to close its offices for two weeks instead of one. Apple Inc. and Adobe Systems Inc. are also asking employees to take time off.
Cisco's closure begins Dec. 29 and lasts through Jan. 2. The company describes it as a 4-day shutdown because it includes New Year's Day, a federal holiday when Cisco offices would be closed anyway.
Cisco said that "business-critical teams" including technical support and ordering services would stay open.
UBS analyst Nikos Theodosopoulos wrote in a note to clients that Cisco is likely aiming for bigger savings than the $1 billion outlined in the company's last earnings call.
Cisco shares closed down 98 cents at $15.42.