Cisco Could Eliminate As Many As 10,000 Jobs: Report

(Reuters) - Networking equipment company Cisco Systems Inc (CSCO.O) could eliminate as many as 10,000 jobs, or about 14 percent of its workforce, to revive profit growth, Bloomberg said, citing two people familiar with the matter.
As many as 7,000 jobs would be eliminated by the end of August, the people told the agency. Cisco is also providing early-retirement packages to about 3,000 workers who took buyouts, according to Bloomberg.

Early on Monday, Reuters reported that Cisco may slash about 5,000 jobs to meet Chief Executive John Chambers' goal of slashing costs by $1 billion. Reuters had cited Gleacher & Co analyst Brian Marshall.

"As we announced on our Q3 earnings call, Cisco will take out $1 billion in costs from our FY 12 expense run-rate as part of our efforts to streamline company operations, including a planned reduction in workforce. We will provide additional detail on the cost reductions, including layoffs, on our next earnings call on Aug 11," Cisco spokeswoman Karen Tillman told Reuters.

Cisco shares closed down about 2 percent at $15.43, in a market that was broadly lower due to concerns about the U.S. budget talks and the euro-zone debt crisis.

REVENUE GROWTH UNDER PRESSURE?

Chambers, who is set to speak at a company event in Las Vegas on Tuesday, is working to turn around the Silicon Valley bellwether. He has said the company's next fiscal year starting in August would not live up to the company's previous growth expectations.

Marshall's estimate for job cuts at Cisco is higher than the previous forecasts of up to 4,000 jobs that are in danger of being eliminated.

The pending job cuts "will help right the ship" and achieve a reduction in operating expenses by about $1 billion annually, Marshall said in a note to clients.

Cisco would also need to lower its long-term revenue growth target to about 10 percent from a forecast of 12 percent to 17 percent, Marshall said.

Cisco's revenue has increased 11 percent over the past five calendar years.

Cisco warned in May that it planned to trim its workforce as part of a plan to cut some $1 billion in costs from its annual budget but did not disclose how many jobs would be cut.

Cisco's previous record layoffs came in 2001, when the company shed some 8,000 jobs, Marshall said.

(Reporting by Poornima Gupta, Sakthi Prasad and Jim Finkle; Editing by Muralikumar Anantharaman and Mike Nesbit)
Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[PenguinLinux]

10:18 AM on 07/13/2011

"Hello Michael. I see you have a CCIE... This is Jose, he'll be your shift leader and show you how we do things here at McDonald's."

[Omeezee]

03:10 AM on 07/13/2011

Amazing this is at the bottom of the page. An American company eliminating 10,000 jobs, during the worst recession ever, crying for a tax holiday, even though their revenue has increase by 11% over the past 5 years. Mr. Chambers aka Gordon Gecko aka Mr. Greed is good. Why isnt this considered treason?

[techBob]

01:44 PM on 07/12/2011

The same Cisco lobbying hard for a Tax holiday so they can bring their "foreign" income home without paying taxes.

[Dana1982]

12:39 PM on 07/12/2011

It's a good thing McDonnalds and Wal-Mart are hiring. This has been a good year for both of these companies as they have more people to choos from for all the new burger flipping jobs Obama is creating.

[techBob]

01:55 PM on 07/12/2011

Unfortunately for Cisco's techies, they would never be considered for those jobs they aren't qualified and wouldn't be expected to stick around.
Then there's the "don't hire the unemployed" stigma to contend with.
I wish them well. By dumping them Cisco, Oracle and the likes are cheapening the technical work force as these folks will likely never see the perks and incomes they once had. Spoken from experience...been there, done that

[Dana1982]

02:05 PM on 07/12/2011

More jobs Obama is shipping overseas. Unemployment will be close to 12% when the election comes around.

[Omeezee]

03:12 AM on 07/13/2011

Republicans are the ones lobbying for tax holidays for people like John Chambers who is doing this. This recession started long before Obama. He's not doing well, but Bush and his deregulating buddies deserve total credit for the mess we are in today.

[Dana1982]

06:15 AM on 07/13/2011

There comes a point where obama owns the economy. I even hear some blaming Reagan for our problems. Really?

[Shawn Wolfe]

11:06 AM on 07/12/2011

10,000 jobs? Well I mean I guess you have to considering profits the first half of this year are down from 3.6 billion last year to a paltry 3.5 billion this year.

But when your CEO gets 10 million in stock as part of his yearly compensation I guess it helps to cut as much as you can to keep your stock price as high as you can. That is what I do not like about this setup in Corporate America.. You can give a company tax breaks.. You can let them keep all the money they want. It is not going to make them hire more people because hiring people takes on costs and costs drop profitability which in turn lowers the stock price and in the end that is all anyone cares about. Cisco is a good company making damn good profits but just because their profitability did not increase to analysts expectations they are going to whack 10,000 jobs .. even though they are on pace to make 7 billion in net profits this year.

[StansDad]

03:54 PM on 07/12/2011

only 7 billion?
heh

[JL-Sosa]

10:46 AM on 07/12/2011

The other side of this story will probably be "Cisco to hire as many as 10,000" however, it wwill probably be written in a foreign language...

[Omeezee]

03:14 AM on 07/13/2011

In India they will pay them 5,000 grand a year instead of the 40-100k American workers made. Of course Cisco will still try and sell its product to Americans. They are worse than the drug lords. At least the drug lords are up front about their intent