Shares of the San Jose, Calif.-based company were rising slightly in premarket trading Tuesday to $45.
A company spokesman told The Wall Street Journal that Cisco "recently decided to stop sales and eventually support [for] the Cisco Kinetic for City product line to align our product investment to evolving market needs and customer requirements."
City planners and local governments have been preparing for a future where technology reshapes the urban landscape. The effort would feature such advances as self-driving cars, smart lighting and connected alarms.
In an effort to tap into that burgeoning market, Cisco developed Cisco Kinetic for Cities software services. However, cities have been forced to cut their budgets in light of the pandemic.
Cisco told the Journal it wasn't abandoning business with local authorities and that it was committed to working with cities in areas like network connectivity and security. It also would support companies offering smart city technologies, the company said.
The setback comes as the pandemic has weighed on Cisco's core business of supplying networking equipment and has limited the ability of local governments to finance such projects, according to the Journal.
In addition, Cisco CEO Chuck Robbins said the company would cut $1 billion in expenses and reduce staff to reflect changes in customer spending priorities during the outbreak.
The company, he said, would place more effort on security services now prized by customers adapting to a distributed workforce.
Cisco didn't immediately respond to a request for comment.
Earlier this year, Alphabet (GOOGL) - Get Report subsidiary Sidewalk Labs said that it was abandoning its plan to transform a portion of Toronto's waterfront district into a high tech utopia due to "economic uncertainty" caused by the coronavirus pandemic