Cisco could eliminate as many as 10,000 jobs: Report

Job cuts to amount to about 14 per cent of U.S. workforce
By Poornima Gupta, Sakthi Prasad and Jim Finkle
||Last Updated: 07/12/2011

SAN FRANCISCO (Reuters) Networking equipment company Cisco Systems could eliminate as many as 10,000 jobs, or about 14 per cent 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 US$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 two per cent 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 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 US$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 per cent from a forecast of 12 per cent to 17 per cent, Marshall said.

Cisco's revenue has increased 11 per cent 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 US$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.

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