Chuck Robbins, the CEO of networking hardware pioneer Cisco, told the managers that the company would increase its operating expenses by $1 billion over the next 12 months. The increase in operating costs comes in response to a rise in employee departures that is shaking up most tech companies.
The decision to increase operating expenses is surprising given that Cisco’s revenue growth flatlined in the last quarter of the fiscal year. The tech giant’s free cash flow fell, resulting in a general shrinkage of operating expenses, making Robbins’ announcement more than surprising. It’s unclear whether the new deal will fall through, and the company hasn’t mentioned Robbins’ plan in its quarterly earnings report or conference call on Wednesday.
The $1 billion boost to operating expenses should happen over the 2023 fiscal year, which began on July 31st. The expenses translate directly into more money for the salaries to keep people from leaving the company.