Cisco cutting home broadband perks to reduce costs

The move is part of a wider effort to shave $1 billion from Cisco's expenses

Cisco Systems is ending a longstanding policy that allows its employees to expense their home broadband service, part of a wider effort to reduce costs in the tough economic climate, sources at the company said.

The change will apply to all of Cisco's employees worldwide, although there are likely to be exceptions for staff who live far from an office and telecommute most days, the sources said. The changes are still being finalized and are likely to be announced internally later this week.

A spokesman for Cisco declined to comment.

It's the latest example of how companies are looking beyond big-ticket items like salaries and travel to shave costs from their business wherever they can. It's a somewhat ironic move coming from Cisco, which encourages clients to use telecommuting and videoconferencing as ways to reduce travel costs and work more efficiently.

Cisco's business, like that of many vendors, is being hurt by the economic slump. Revenue for its second fiscal quarter, ended Jan. 24, was down 7.5 percent from a year earlier, with profits off 27 percent. The company has said it expects revenue for the current quarter, which ends in April, to be down 15 percent to 20 percent year over year.

Cisco announced last November that it aimed to reduce its operating expenses by US$1 billion for this fiscal year. It said it would target travel costs and discretionary expenses such as offsites, outside services, trade shows and marketing activities, among others.

CEO John Chambers said last month that Cisco didn't plan any mass layoffs, which he characterized as 10 percent or more of staff, but he said it might reduce headcount by up to 2,000 through "realignment" and "restructuring." The first few hundred workers were laid off last month, according to published reports.

Many tech companies have made much wider layoffs, and some have been cutting salaries and bonuses as well. Intel confirmed on Monday that it had frozen salaries across the entire company. "We are in the toughest recession in the history of our industry and we need to continue to control our costs," said Intel spokesman Chuck Mulloy.

Reducing payments for home broadband may seem like a small move, but for a company with more than 60,000 employees, the expenses could add up. Cisco also stopped providing free sodas to its staff about a month ago, one of the sources at the company said.

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James Niccolai

IDG News Service
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