Cisco cuts 6,000 jobs as CEO seeks turnaround
Demand for company's network routers and switches continues to decline.
Cisco Systems (CSCO) is cutting 6,000 jobs, or 8 percent of its workforce, as it faces weakness in emerging markets and a slump in demand from telecommunications-service providers.
The world's largest networking-equipment maker had about 75,000 staff at the end of July. Including the latest round, Cisco has eliminated more than 18,000 employees over the past three years.
John Chambers, who is nearing retirement after almost two decades as Cisco's chief executive officer, has been grappling with slowing growth for its market-leading routers and switches. Phone carriers and other large companies are replacing legacy network hardware with software that performs many of the same tasks.
"It's a transition that's inexorable, and it really puts the pressure on Cisco," said Alex Henderson, an analyst at Needham & Co., who has a hold rating on Cisco's stock.
Sales in the current fiscal quarter through October will be $12.1 billion to $12.2 billion, based on the company's forecast for revenue to remain flat or rise 1 percent.
The shares of San Jose, California-based Cisco fell in extended trading. The stock advanced less than 1 percent to $25.20 at the close in New York, leaving it up 12 percent this year, compared with a gain of 5.3 percent in the Standard & Poor's 500 Index ($INX).
Revenue in the period that ended July 26 was $12.4 billion, the company said in a statement today. That beat the average analyst estimate for $12.2 billion, according to data compiled by Bloomberg. Profit, excluding some items, was 55 cents a share, versus a projection for 53 cents.
Net income in the fourth quarter fell to $2.25 billion, or 43 cents a share, from $2.27 billion, or 42 cents, a year earlier.
Cisco faces a challenging shift as customers move from buying hundreds or thousands of proprietary machines with gross margins of 60 percent or more to software-defined networks that can run more efficiently on cheaper gear. The trend has been embraced by companies including Google Inc. and Facebook Inc.
For the year, Cisco's sales fell 3 percent to $47.1 billion, the first decline since 2009.
Cisco has exited consumer businesses, cut staff and restructured its management in the past three years. The company has come under increased pressure from rivals including Huawei Technologies Co. and Arista Networks (ANET) in its main businesses, while newer competitors such as Palo Alto Networks (PANW) and FireEye take share in growing markets such as computer and network security.
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Unless any of them happen to be in the fixed unemployment pool of homes that are surveyed over an over, not a one will be counted as unemployed.
Time to boycott them. Guess what...they are hiring 12000 in China to replace them!
I don't buy the official storyline.
"Cisco faces a challenging shift as customers move from buying hundreds or thousands of proprietary machines with gross margins of 60 percent or more to software-defined networks that can run more efficiently on cheaper gear. The trend has been embraced by companies including Google Inc. and Facebook Inc."
This may be one factor, but Western economies are struggling or contracting. Also there may be deadweight that rightly needs to be cut out just to spur existing engineers and managers to become more creative and effective or face extinction. Cisco used to be creative... years ago...
Sure the employment situation is really getting much better. Microsoft, Boeing, all the hi-tech companies, other businesses, retail are getting rid of employees. Especially top CEO"s of major Businesses, and Corps. It so happens the ones getting layed off are in their mid 40's or 50's, which makes it much harder to keep the same kind of job or find one like it.
It's all in the name of using part-time workers--they don't have to pay for ACA---The Global economy is also not so good.
When is lying to the American public going to stop---how many people do you know who will not have a job very soon? This is the "New Normal" for Employment---"Don't work too hard, do not be loyal to your Company
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