Cisco Destroyed $23.5 Million Worth of Equipment During Russia Exit

Trash
(Image credit: Bill Varie/Getty Images)

Cisco was one of the first high-tech companies to halt its business in Russia and Belarus after the former started its full-scale war against Ukraine on February 24, 2022. During the company's exit, Cisco's Russian subsidiary physically destroyed unsold equipment worth 1.9 billion rubles ($23.5 million), reports CNews citing the state-run Tass agency.  

Network giant Cisco destroyed its equipment stocks worth almost 1.9 billion rubles ($23.5 million) in January 2023, months after announcing its decision to discontinue operations in Russia and Belarus in March 2022. The physically destroyed equipment included mainly spare parts for the company's devices that were not sold due to the current policy imposed by Cisco. Meanwhile, it is unclear whether those spare parts also fall under the U.S. sanctions against Russia. 

Despite the financial impact, Cisco made the decision to destroy the equipment rather than allow it to fall into Russian hands. But while $23.5 million sounds like a lot of money, the actual impact seems to be considerably higher. 

While the Russian news agency claims that the equipment was destroyed in January, Cisco's financial report for the quarter that ended January 28, 2023, does not mention this in any way. This is because the company essentially wrote off $67 million worth of assets, including spare parts already imported to Russia as well as furniture and cars, after conducting a risk assessment of its assets and potential financial exposures in Russia and Belarus as early as calendar Q1 2022. 

Based on the assessment, Cisco reserved for the non-recoverability of most of its assets in these countries. Consequently, it recorded non-recurring charges of $67 million in its cost of sales and operating expenses in the third quarter of fiscal 2022. These charges were related to the non-recoverability of certain assets and special personnel-related expenses aimed at supporting affected employees. 

It should be noted that for Cisco, which reported revenue of $13.592 billion and net income of $2.773 billion in the second quarter of fiscal 2023, $23.5 million worth of equipment and $67 million in various assets are relatively negligible sums of money. 

Anton Shilov
Contributing Writer

Anton Shilov is a contributing writer at Tom’s Hardware. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

  • wbfox
    Call me a cynic, but date stamped independently verified video and full return shipment of the destroyed gear in compacted cube form or it didn't happen. And even if it did happen, Cisco set value for gear is probably only mostly slightly inflated, mostly. I'm not saying all the switches happened to be fully kitted out with every license and software key you can buy....I'm just assuming that's how they got valued.
    Reply
  • motocros1
    too bad they inflated the cost and "destroyed" them. i'd take them off their hands for free
    Reply
  • derekullo
    wbfox said:
    Call me a cynic, but date stamped independently verified video and full return shipment of the destroyed gear in compacted cube form or it didn't happen. And even if it did happen, Cisco set value for gear is probably only mostly slightly inflated, mostly. I'm not saying all the switches happened to be fully kitted out with every license and software key you can buy....I'm just assuming that's how they got valued.

    In regards to exporting products to Russia the Russian sanctions only stipulate that companies such as Cisco are not permitted to export cutting-edge technology (e.g. quantum computers and advanced semiconductors, electronic components and software) to Russia.

    Surprisingly, according to,
    https://www.consilium.europa.eu/en/policies/sanctions/restrictive-measures-against-russia-over-ukraine/sanctions-against-russia-explained/#tradeThere doesn't appear to be any law of exporting cutting-edge technology aka Cisco's Stuff from Russia to other countries.

    Given enough time Cisco could have put their stuff on a plane and sent it back to a nearby friendly country thereby avoiding at least some part of the write off.

    We can only assume Cisco thought there wasn't enough time for that, much less hiring a Compression Crew, Film Crew, and all the other crews needed and flying them into Russia, the flying being risky in and of itself, for the "Compact All Of Our Stuff Into A Giant Cube To Present To The World How Ethical We Are" program.

    For all Cisco knew Putin could have came in himself and taken control of the buildings and confiscated everything.
    Reply
  • greenreaper
    Wouldn't be surprised if a few local employees ended up with a significantly upgraded home networking setup.
    Reply
  • TheOtherOne
    It's not like they are ever gonna get this "not so inflated very tiny amount" back by insurance claims, right? :devilish:
    Reply