At the core of our company’s values is a simple concept: make Cisco customers successful. We have a vigorous process for measuring customer satisfaction and success, and conduct constant analysis of the competitive advantage they can achieve by using our technology solutions and services. This ongoing focus is designed to anticipate our customers’ business needs today, as well as in the future.
Cisco has been working with individual customers on an issue related to memory components manufactured by a single supplier between 2005 and 2010. These components are widely used across the industry and are included in a number of Cisco products. They are known to slowly degrade over time, and in some cases, have caused products to fail after being turned off and on.
The majority of Cisco products using these components are experiencing field failure rates below expected levels. Recently, however, a handful of our customers have experienced a higher number of failures, leading us to change our approach to managing this issue.
Despite many of these products being out of warranty, Cisco has decided to take a charge of $655m related to the expected cost of managing these issues. We are taking this action to support our customers and partners. This charge was excluded from our non-GAAP financials, as we do not believe it is reflective of ongoing business and operating results.
Our goal to become the world’s #1 IT provider is built on providing a superior experience for our customers in every aspect of working with Cisco. We believe our approach to this industry-wide issue is the best course of action for our customers. Despite the cost, it reiterates that we place their success above all else.
As always, we encourage our customers to contact the Cisco Technical Assistance Center (TAC) if they experience a failure in any Cisco product. If you have additional questions about this process, we recommend reviewing the additional updates at www.cisco.com/go/memory.