Cisco to shed 4,000 jobs despite profit increase

Cisco CEO John Chambers has said that although business has been improving steadily, the company plans to shed 4,000 more jobs to create a more leaner and agile operation.

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Cisco to shed 4,000 jobs despite profit increase Chambers says layoffs are meant to create a more leaner and agile Cisco.
By  Manda Banda Published  September 20, 2013

Cisco CEO John Chambers has said that although business has been improving steadily, the company plans to shed 4,000 more jobs to create a more leaner and agile operation.

Cisco shares plummeted more than 9% to $23.92 last month after the company announced plans to shed 4,000 jobs – or about 5% of its global workforce – starting in its fiscal first quarter of 2014.

Cisco CEO John Chambers declined to specify which geographies or product groups within Cisco would be affected by the impending cuts.

“We aren’t going to share any detail now or in the near-term future on which geographies will be affected or at which level,” Chambers said.

The layoffs, which Cisco referred to as a “workforce rebalance”, are meant to create a leaner, more agile Cisco, Chambers said.

“The most difficult decision we make as leaders are those that impact our employees. However, we will always take the necessary actions to efficiently manage our business for the long run,” Chambers said. “Consistent with what we have said over the past two years, we are positioning the company to accelerate and lead with greater speed, flexibility and agility.”

Cisco has made several trims to its global workforce over the past two years.

In March this year, Cisco announced plans to cut 500 jobs from its global ranks, adding to the roughly 1,300 job cuts it made in July 2012 and the 6,500 cuts it made in July 2011. These first two rounds of layoffs were part of Cisco’s broader strategy, at the time, to trim approximately $1bn in expenses.

The job cuts weren’t attributed to any specific decline in a Cisco product segment or geography, but the company did report that fourth quarter revenue for its NGN Routing and Security segments was flat year-over-year.

The networking solutions company also reported a year-over-year decline in product orders within its US service provider segment, along with a 3% drop in product orders in its Asia-Pacific and China customer segment.

Overall, Cisco reported Q4 revenue of $12.4 billion, up 6.2% compared to the same quarter in 2012, along with a net income of $2.3 billion, up 18.4% compared to the same quarter last year.

For its full-year fiscal 2013 results, Cisco reported revenue of $48.6bn, up 5.5% compared to its annual revenue last year, and a net income of $10 bn, up 24.2% compared to its net income last year.

The company’s bright spots for the quarter included Cisco’s Wireless segment, which saw revenue jump 32% compared to the year-ago quarter, along with its Data Centre segment, which saw revenue jump 43% compared to the year-ago quarter, an increase Chambers attributed to Cisco’s recent traction in the x86 blade market.

“We are pleased to have moved into the number two position worldwide in the x86 blade market, with approximately 20% market share, something our peers would have considered impossible a couple of years ago,” Chambers said.

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