Several analysts told Reuters that as many as 4,000 Cisco jobs could be cut as the company works to regain its footing in an increasingly competitive industry.
At a time when most tech companies are hiring workers, Cisco Systems is
about to pare its workforce. And according to some analysts, those layoffs
could be significant.
a May 11 conference call to discuss quarterly financial numbers, both Cisco
Chairman and CEO John Chambers and COO Gary
Moore said job cuts were on the way as the networking giant tries to get back
on solid footing after several disappointing quarters.
would say how many of Cisco's 73,400-plus employees would lose their jobs, but
both made clear that such cuts were going to play a key role in the company's
efforts to pare $1 billion from its operating expenses this year.
analysts contacted by Reuters
said the figure could be as high as 4,000,
with the average being around 3,000. Some of that will include an early
retirement plan the company has instituted, as well as attrition, but many will
be straight layoffs. That would be more than the 2,000 jobs Cisco cut in 2002,
after the Internet bubble burst.
not all analysts believe the job cuts will be as steep. Shaw Wu, an analyst
with Sterne, Agee and Leach, told Bloomberg that he expects layoffs to be in
the "low thousands."
that would be ... huge," Wu told Bloomberg. "It seems like more streamlining."
during the May 11 call said Cisco will dial down or exit underperforming
businesses over the next few months, which will account for many of the
layoffs. Soon after Chambers sent out a memo to employees in April saying that
Cisco had lost its way and that changes would be made, Cisco revamped its
consumer products business, which included shuttering
its popular Flip video camera line
. That move led to about 550 layoffs.
Cisco announced a reorganization
of its sales, services and management
units, including reducing the number of management councils from nine to three.
company has seen success in a number of its many units, such as its
collaboration, wireless and data center businesses, the latter of which
includes its UCS (Unified Computing System) converged infrastructure offering.
All three saw at least 30 percent year-over-year growth.
it's been hit hard in its core switching and public sector, where federal
agencies and state governments are contemplating deep budget cuts. Cisco in
2010 saw its switching market share drop to about 67 percent, according to IDC,
down from close to 70 percent previously. Analysts said rising competition from
likes of Hewlett-Packard
, Juniper Networks, Avaya and Huawei Technologies
are putting pressure on the market leader.
is more vulnerable now to competitors than at any time in its history," Scott
Dennehy, an analyst with Technology Business Research said in a report. "The
company's difficulties with execution combined with aggressive tactics by
vendors such as HP and Huawei is providing unparalleled opportunities for
competitors to take share in Cisco's core markets. However, TBR expects this
window will not be open indefinitely; Cisco has demonstrated its ability to
manage through difficult times in the past, and once the company completes its
transformation it will re-emerge as a more focused and driven vendor, supported
by financial resources few can match."