Cisco Systems Inc, the world’s largest networking-equipment company, may cut as many as 10,000 jobs, or about 14 percent of its workforce, to revive profit growth, according to two people familiar with the plans.
The cuts include as many as 7,000 jobs that would be eliminated by the end of next month, said the people, who asked not to be identified because the plans are not final. Cisco is also providing early-retirement packages to about 3,000 workers who accepted buyouts, the people said.
Cisco CEO John Chambers is slashing jobs and exiting less-profitable businesses as competitors such as Juniper Networks Inc and Hewlett-Packard Co take market share with lower-priced, simpler products.
Eliminating jobs will help Cisco wring US$1 billion in savings in the next fiscal year, the company said in May. Cisco expects costs of US$500 million to US$1.1 billion in the fiscal fourth quarter as a result of the voluntary early retirement program, it said in a quarterly filing.
“We will provide additional detail on the cost reductions, including layoffs, on our next earnings call,” Karen Tillman, a spokeswoman for San Jose, California-based Cisco, said in reference to an earnings call scheduled for early next month.
The voluntary retirement packages included one year’s pay and medical benefits, and were offered to about 5,800 employees, two people said.
Analysts at Gleacher and Miller Tabak & Co said on Monday Cisco would cut at least 5,000 jobs as part of a turnaround effort.
Cisco’s share of worldwide switching revenues dropped 5.8 percentage points to 68.5 percent in the first quarter of this year from a year earlier, according to a May report from Dell’Oro Group, a Redwood City, California-based researcher. Hewlett-Packard gained switching share in that period.
In global router sales, Cisco lost 6.4 percentage points to 54.2 percent of the market, while Juniper gained, Dell’Oro said.
Cisco said in May that it shuttered the Flip video-camera unit and cut 550 jobs. The company may eliminate more positions in the consumer-product unit, which makes Linksys home-networking equipment, said Brian Marshall, an analyst at Gleacher & Co.
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