"There should be no Business Group, Technology Group or Business Unit-funded holiday parties." That's the extra bullet through the heart in an email being sent around Cisco. I've screencapped only part of it, because I promised not to provide any pointers to my leaker. Here's the ASCII text version:
The economic pain continues to trickle down: Cisco is cancelling a two-week sales conference planned for next August in San Francisco. Conferences like this are a combination of boot camp, old-fashioned tent revivals, and frat keggers, held to rev up a company's revenue generators; ostensibly meant to educate salespeople about new products and compensation plans, they more often devolve into debauchery.For Cisco, even the cancellation is a sales opportunity; the company is pitching it as an example of the money-saving potential of its videoconferencing and teleworking products. Boring! Throwing money at salespeople is the best way to make them feel loved — just another sign that Cisco has no real understanding of what a human network really means. It also suggests CEO John Chambers's influence is waning at the company — since this is the kind of event at which his evangelical delivery shines.
Cisco, the San Jose-based networking-equipment giant, is closing its free campus gyms — and replacing them with a new, larger one for which employees will have to pay $20 a month. In explaining the change, Cisco's HR team has claimed it's subsidizing the price of the gym, as well as other health facilities at the same site by 90 percent. So, what, the gym would actually cost $200/mo. at market rates? Must be some gym. Check it out in this video a Cisco source smuggled off-campus, and read Cisco's memo, which touts the loss of free gyms as bringing a "positive return on investment for Cisco." If you're feeling brave, crash the gym's grand opening on Monday.
I'm a liar. So are you. The funny part is, we all know it. A new study by Cisco just confirms it. The 10-word version: "Everyone breaks published security policy to get their job done." None of this is a surprise to your IT department. We long for the day we can punish problem users for violating the pages of acceptable-use policies they signed but never read their first day on the job. Please, please, please just let us ban one guy from the network — pour encourager les autres, as Voltaire said.
When Wall Street fails, Silicon Valley must step up. So goes the hubristic thinking here. Debt greases the wheels of commerce, and the sale of servers and software is no exception. And that part of the credit industry has hit a rough patch, too, with defaults on equipment loans nearly doubling in the past year. As with other credit markets, this had made traditional lenders nervous. So cash-rich tech companies are venturing into lending themselves. IBM has long had an in-house lending arm, with $24.5 billion in loans outstanding. Cisco lent $4 billion to customers last year. Even eBay is getting into the game through Bill Me Later; it acquired $550 million in consumer loans in conjunction with the purchase of the payments startup.We know how this ends — with tech-company shareholders footing the bill. Cisco wrote off $900 million in bad debt in 2001. It will surely claim to have learned its lessons since then. But as others rush in to help customers acquire their wares, some will surely get burnt. As will investors, who may think they're buying shares in a tech company, only to discover they've put money into a bank.
Billionaire Andreas von Bechtolsheim — "Andy" to us — cofounded Sun Microsystems in 1982. The original Sun team of Bechtolsheim, Vinod Khosla, Bill Joy, and Scott McNealy were like the Beatles to a previous generation of Silicon Valley engineers. Now, Bechtolsheim's using the current imaginary financial apocalypse to plant good news about Arista Networks. "Innovations in Cloud Networking" is the company's meaningless slogan. What Andy really wants to say: Throw those stinky old Cisco routers away! Oh, here's the part where Sun PR tells everyone a lie about Bechtolsheim "continuing his present involvement" at Sun as an advisor. Never mind that — just read the nut from his NYT article.
There's a thin line between "cheerleader" and "liar." And Cisco CEO John Chambers likes to wave his pom-poms over it. Speaking at a Gartner conference, Chambers said the company wasn't planning any cutbacks, commenter sample032 noticed. On Monday, Cisco filed papers to start a mass layoff of 129 employees in its Richardson, Texas facility. Not technically a lie, a Cisco spokesman maintained to the San Francisco Business Times, because the company "continuously evaluates its businesses to align human and capital resources to address key growth opportunities and improve efficiency." The new euphemism for "layoffs" is "business as usual."
Where's the debt crisis in Silicon Valley? The knock-on effects are all too real, but frozen credit markets have had little direct effect on business operations, aside from possibly scotching the debt-fueled sales of Alltel and Nextel. That's because technology companies are run by paranoid sorts who like to keep large cash reserves, in case some upstart renders their market obsolete. In good times, activist shareholders whinged about their parsimonious habits, but the cash hoarders are now sitting pretty — and could be set for acquisition binges.One company which listened, to its detriment, to shareholders was Microsoft. When Bill Gates ran the software company, he liked to keep a year's worth of expenses on hand, in case things went awry. Microsoft is no longer quite so stingy with its cash; it dribbles some out in dividends, and gave shareholders a $32 billion payout a few years back. Good thing it didn't shell out $44 billion for Yahoo; that deal would have left it cash-poor and debt-ridden, at exactly the wrong time. Even so, Microsoft's balance sheet is no longer the most sterling in tech. So who's got cash on hand? Here are the 10 richest tech companies, from a Yahoo Finance screening. (I left out companies, like IBM, whose cash was matched by equally outsized debts.)
Fast Company videoblogger Robert Scoble, embracer of new technologies and young women, has informed Twitter users everywhere that he is "talking to all Cisco employees this morning ... about the latest Web collaboration stuff." Whom he has not informed: Cisco employees everywhere. "My inbox and trash have no mention of 'scoble' anywhere," a Cisco worker bee tells us. Well, duh — the announcement must have gone out on FriendFeed.
Why is a router maker buying Jabber, an open-source AIM clone? Disgruntled network admins (I'm still one in my heart) understand what Cisco's own press release doesn't spell out in English.Jabber isn't just another AIM wannabe. It uses XML trickery to connect to every popular instant message service — AIM, ICQ, Windows Live Messenger, and Yahoo — and to let programmers connect it to other services, be they for man or machine. It's already widely adopted by the IT workers whose managers sign the purchase orders for Cisco networking hardware. By building Jabber support into its switchers and routers, Cisco can make it easy for admins to get alerts from their hardware in the same IM window as their buddies. Cisco can also sell companywide IM setups that are closely tied to Cisco network gear for security and monitoring. Cisco recently picked up PostPath, which makes Linux-based email, calendar and collaboration software. I'm sure someone at Cisco plans to bundle Jabber's instant messaging with PostPath's Outlook-like features and dub it a "platform" to compete with Microsoft. But Jabber's main competition isn't Redmond, it's Dulles. Cisco can now offer managers a way to ban AIM from the workplace, or at least to manage it locally with Cisco equipment rather than routing employees' conversations straight to AOL.
If Silicon Valley is mentally disconnected from this week's Wall Street mess, it's because ad-supported companies dominate the Valley these days. High-net-worth investors aren't reeled in with cheap banners, so the demise of Lehman Brothers or Merrill Lynch hardly pinches budgets. Lehman spent just $501,900 on ads, both online and off, in the first half of 2008. Merrill Lynch, which has a much larger consumer business, still only spent $38 million on advertising last year. Still, some 150,000 people will lose their jobs in this week's fallout. That's a lot of tech infrastructure no one will want to pay for anymore. Lehman, for example, spent $309 million on IT last quarter alone. What's more, Lehman's investment banking connections run deep in the Valley's world of startups, VCs and big company buyers. Below, five tech companies that find themselves wishing they could unleash themselves from Wall Street's fate.
When it became obvious over the weekend that investment bank Lehman Brothers would finally fail and that no one was going to rescue it, Merrill Lynch CEO John Thain realized the market's reaction today would tank his company as well. So Thain met with Kenneth Lewis, CEO of Bank of America, and the pair reached a deal to sell Merrill Lynch to Bank of America for $44 billion. Which is, you might recall, around the price Microsoft wanted to pay for Yahoo. Of course, that kind of offer won't be coming for Yahoo again any time soon. While not so severely or directly, Lehman Brothers' collapse and insurance giant AIG's tottering on the brink will affect your tech portfolio today. Before this morning's open the company's stock was already down 3.83 percent on premarket trading. Watch Yahoo and nine other tech stock's continuing destruction or — dare you hope? — miraculous resilience on live stock charts below.Click to view
Bay Area-raised biotech heiress Meghan Asha, who now lives in New York and egoblogs for fired Star editor-at-large Julia Allison's NonSociety, appears in an endorsement video for Cisco. The "Digital Cribs" lifestyle shoot has a brief product placement of a Cisco Linksys wireless router. Asha claims that she uses the Linksys for her home Wi-Fi network, which she calls "Geeking Out." Wait for the blooper which shows the whole setup's a fake, 23 seconds in:Click to view