OAKLAND, California (Reuters) - Cisco Systems Inc (CSCO.O) on Tuesday launched a $2.5 billion financing program that lets its customers defer 95% of payments until 2021, giving companies additional leeway at time when some are facing a cash crunch but also need more remote-work tools.
As the coronavirus forces many businesses to operate entirely online, many of them have adopted or boosted usage of video conferencing and virtual private network software, including Cisco’s Webex and AnyConnect. The surge in internet activity has also increased usage of networking equipment that Cisco also sells.
The financing offer, which requires no payment for three months and then 1% of money owed in each of last five months of 2020, could help Cisco stand out among competitors in software and hardware and keep revenue flowing in a challenging economic climate.
Customers “are trying to reconcile how to make this investment to acquire solutions without knowing what’s around the corner,” Kristine Snow, senior vice president for financing arm Cisco Capital, said in an interview.
Cisco, which has extended financing for over two decades, had $9.6 billion in loans and other instruments in its portfolio as of Jan. 25. The company held about $8.5 billion in cash and equivalents at the time.
Its new program will be initially available in 19 locations, including the United States, Greater China, India and Germany. Hardware, software and services are covered, as are some fees charged by Cisco’s sales and installation partners.
Reporting by Paresh Dave; Editing by Edwina Gibbs