Cisco to Cut 6,500 Jobs, Plans to Refocus on Routing & Switching Business

SAN JOSE, Calif. — In an effort to trim more than $1 billion in annual costs and increase profit growth, Cisco Systems will cut 6,500 jobs or 9 percent of its workforce.

Roughly, 2,100 employees opted to take an early retirement package, while the remainder will be laid off, Bloomberg reports. Cisco expects to save $1.3 billion with $750 million to be recorded in the 2011 fourth quarter. The remainder will be booked in fiscal 2012.

The company also plans to sell its plant in Juarez, Mexico, to Foxconn Technology Group. Cisco acquired the site in 2006 from Scientific-Atlanta Inc. The company does not anticipate any job losses from the sale, although the 5,000 workers at the plant will be transferred to other positions.

With shares for the company dropping 24 percent this year, a rumor spread last week that the company would cut 10,000 jobs. Alkesh Shah, an analyst at Evercore Partners, stated that Cisco realized it needed to lower costs as the market becomes more competitive, Bloomberg reports.

The layoffs are part of an effort by Cisco’s CEO John Chambers to refocus the business on its main routing and switching business. Its rivals – Juniper Networks and Hewlett Packard – have experienced increases in market share, while Cisco has declined.

Source: Bloomberg


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