A Bunch Of Cisco's Products Have A Defect That Will Cost $655 Million To Fix

During Cisco's quarterly financial report, it slipped in this bit of bad news: it expects to spend $655 million to fix a problem with a defective part for a product that is widely installed in lots of company's networks.

The problem is a memory chip that it bought from a single supplier between 2005 and 2010. Those memory chips are vital to the machine, and the faulty ones sometimes die when a machine is powered up or turned off, Cisco said.

This would make the network device stop working properly, and could maybe even cause the company's network to go down.

But here's the kicker. Cisco has known about the problem since 2010, and it took Cisco a couple of years to stop using the faulty chip, it said:

Cisco products with the suspected memory components began shipping in 2005, and this continued until the final component was identified and removed from our inventory in 2012.

It's been replacing this part in its customers' routers since 2010 on a case-by-case basis, if a customer reported a problem.

But on Wednesday, it told customers about the problem and released a big list of popular Cisco networking products that could be affected, including routers, switches and wireless routers.

While downplaying the risk to customers, this is why it changed its mind on disclosing the problem:

A handful of our customers have recently experienced a higher number of failures in their networks, which is why we are changing our approach in managing this issue.

On the upside, Cisco also said that it will cover the cost of replacing this defective chip even for products that are out of warranty, which, it said, many of them are. Hence it's set aside $655 million to cover the costs.