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Cisco to slash ‘up to 10,000 jobs’

Networking vendor to cut thousands of jobs to spur profit growth, sources say

Cisco to slash ‘up to 10,000 jobs’
Cisco has seen share of its core markets fall

Cisco, the globe's largest provider of enterprise networking infrastructure, could axe up to 10,000 jobs in a bid to revive flagging profits.

The plans, which would represent around 14% of the US vendor's total workforce, were disclosed to Business Week magazine by two anonymous sources familiar with the matter.

The layoffs would include the elimination of 7,000 roles by the end of August 2011, in addition to 3,000 early retirement packages for other workers.

In its most recent fiscal reporting period, Cisco saw its net income dwindle by 17.6% year-over-year to $1.8 billion. This was despite total revenues demonstrating a modest increase of 4.8% annually to $10.9 billion. The company's operating expenses stood at a hefty $4.5 billion.

This year, Cisco has attempted to offload some of the less profitable parts of its portfolio in a bid to address its conundrum. In March, it shuttered its Flip video camera and consumer video conferencing businesses, shedding 550 jobs in the process. Announcing these closures, CEO John Chambers said Cisco had "lost its way".

Statistics published by research firm Dell'Oro back in May also suggested that Cisco was losing its foothold in its core switching market, which it has historically dominated. In the first quarter of 2011, Dell'Oro's analysis showed that Cisco's market share in terms of revenue slipped 5.8 percentage points to 68.5%. In the same period, the market share of its main competitor, HP Networking, increased.

Other rivals, including China's Huawei and Juniper Networks, have also ramped up their efforts in the enterprise space.

Yesterday, an analyst at San Francisco investment bank Gleacher & Co claimed that Cisco would look to trim its workforce by about 5,000 employees. In a research note, analyst Brian Marshall said that move would reduce Cisco's operating expenses by approximately $1 billion a year.

No one from Cisco was available to comment on the story when approached by Network Middle East magazine.

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