Cisco's Time Off

11/25/2008

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2:40 PM -- Word's gotten around that Cisco Systems Inc. (Nasdaq: CSCO) plans to shut down for the week after Christmas.

It's the first such shutdown ever for Cisco, according to UBS Investment Bank analyst Nikos Theodosopoulos, whom Reuters is crediting with spreading the news today.

But shutdowns are common around Silicon Valley. The semiconductor equipment business -- including companies like Applied Materials Inc. (Nasdaq: AMAT) -- seems to have forced time-off stretches every couple of years. There, you're talking about an industry that sells big expensive robots to chip foundries, the kind of equipment that's prone to lumpy revenues and long dry spells; I've always thought of their shutdowns as not only a cost-saving measure, but a concession to the fact that no one's going to be ordering anything during the holidays.

Cisco is a bit different, with a more steady flow of orders -- but of course, that flow has dried up a little. (See Cisco Predicts Q2 Plunge.) If moves like a shutdown -- or canceling the annual sales meeting -- can help Cisco reach its $1 billion in cuts without a layoff, then I don't think you'll hear many complaints.

— Craig Matsumoto, West Coast Editor, Light Reading