Cisco Plans To Cut 6000 Jobs Yet Again

by CXOtoday News Desk    Aug 14, 2014


Following another quarter of declining results, Cisco Systems plans to slash another 6,000 jobs. The latest round of layoffs, which would comprise a reduction of 8 percent of its workforce, is the third workforce reduction in recent years. The company announced in August 2013 that it would cut 4,000 jobs. And in 2011, it said it planned to reduce its workforce by more than 11,000.

Cisco said it expects adjusted earnings for the current quarter to come in between 51 cents and 53 cents per share, versus analysts expectations of 53 cents per share. The company forecast sales for the current quarter to come in between flat and up 1 percent, while Wall Street is expecting fiscal first-quarter revenue to come in flat at $12.08 billion, according to Thompson Reuters. 

Experts believe while Cisco led by example as the world’s most successful network equipment maker at one time, lately it has been struggling to sustain growth. “The market doesn’t wait for anyone. We are going to lead it, period,” CEO John Chambers told analysts on a conference call. “The ability to do that requires some tough decisions. We will manage our costs aggressively and drive efficiencies,” he said noting that it is going through a transition toward a new cycle of high-end switches and routers.

In an interview with The Wall Street Journal, Chambers said the job reductions are designed to make room for adding different kinds of skills rather than cutting total costs. “Shedding employees in declining businesses will allow the company to add needed skills in units that are growing. We will exit this year pretty much with the same number of people we started the year with,” he said.

The company also said it plans to add staff in areas that include its data center, software, security and cloud offerings. While Chambers declined to mention the areas that are likely to see job cuts, he hinted at sales representatives in countries where revenues are shrinking, said the WSJ report.

Chambers blamed the cuts to a certain extent on the uncertainty in global demand. In emerging markets too, the company faces constant challenges of sluggish sales and increased competition. In  China, demand fell 23 percent, and Brazil had 13 percent declines that are not likely to become better in the coming quarters.

Cisco’s high-end routers and switches declined 7 percent and 4 percent year-over-year, respectively, as customers were slow to order a new series of products. Its data center revenues rose 30 per cent, and security sector revenues rose 29 percent. Security revenue was boosted by the acquisition of SourceFire, a cyber security firm Cisco acquired in October 2013.