Cisco setting aside $125 million for Intel Atom issues?

Earlier this month there were reports about a "clock component" issue that's bricking networking products from Cisco. The company refuses to go into the details and will not name the company that supplied this chip, but it's widely believed that Intel's Atom C2000 is the most likely culprit.

Now we hear Cisco is setting aside a reserve of $125 million to deal with this issue:

Cisco CFO Kelly Kramer said the networking giant doesn't anticipate any material revenue impact from a faulty clock component issue inside several of Cisco's popular product lines that causes the system to eventually fail.

"We've have had an issue from a supplier come out and we did book a reserve for $125 million to cover that," said Kramer, during Cisco's second fiscal quarter earnings call on Wednesday night. "We always and continue to stand by our customers through any situation like this … This is a failure rate that will happen overtime, but we're working with our customers to work through that. We're not anticipating any impact from that from a top line perspective."

A webpage with more details about Cisco's clock signal component issue can be found here. Other network gear makers are also investigation the issue as there are indications that it's not just limited to Cisco.