Managing in a Challenging Economy
There have been a number of media reports on our expense control measures and what we are doing to manage our business in this challenging economy. On our Q1 FY ’09 earnings call, we announced that we will be reducing our expenses for FY09 by over $1B from our annualized expense run rate given the challenging macroeconomic environment. We will target reductions in travel and discretionary-related expenses, including offsites, outside services, equipment, events, trade shows, marketing and other activities. As part of this effort, we will also implement a year-end shutdown of the US-Canada theater from December 29, 2008, through January 2, 2009 (note that January 1 is already a holiday). There will be some exceptions for targeted business-critical teams including technical assistance services and channel partner and customer product ordering services. While this is not our first year-end shutdown as we followed this longstanding Silicon Valley practice in our early years as a company, it is our first in over a decade. Given the difficult macroeconomic conditions, we believe our cost control focus at this time is appropriate while still providing our partners and customers with critical services over the year-end period.Post-earnings we also posted this video of Chairman and CEO John Chambers stating, in part, that while we will undertake appropriate expense management initiatives in the current environment, we will also make some calculated investments into areas where we believe we can accelerate development and Cisco’s leadership.