Cisco Cuts 1,300 Job Amid Corporate Spending Slowdown

By CIOinsight  |  Posted 07-24-2012 Print Email
The job losses come two months after Cisco executives warned about enterprises slowing their IT spending in the face of a struggling global economy.

Less than a year after cutting 6,500 jobs in a push to save $1 billion in expenses, Cisco Systems is eliminating another 1,300 positions as it looks to deal with the uncertain global economy and weak corporate IT spending.

In doing so, Cisco joins other top-tier tech vendors -- including Hewlett-Packard, Nokia and Research In Motion -- in eliminating jobs as part of a larger plan to streamline the business and improve profits as they deal with issues brought on by outside economic forces and questionable internal decisions.

Cisco's announcement follows its fiscal third quarter in which it posted some positive numbers -- 7 percent sales growth and a 20 percent increase in net income -- and strength in key businesses like cloud, video and services. However, CEO John Chambers, in talking with analysts and journalists about the financial numbers May 9, also warned that the uncertain global economy -- particularly in Europe -- was making enterprises and service providers skittish, and causing some to take a wait-and-see approach before spending their IT dollars.

"When I talk to our customers, they do not see an economic downturn similar to the global recession of a few years ago occurring in their environment, and they traditionally even the areas that have been going slow like service providers and also the financial services industry group -- have said their plans are to spend more in the second half of the year," Chambers said. "However ...in the very next sentence they said, 'We are waiting to see what happens in Europe and what happens with government policy.' "

Cisco is scheduled to announce fiscal fourth-quarter financial numbers Aug. 15.

While significant, Cisco's job cuts pale in comparison with those at HP, which announced in May it was eliminating 27,000 positions -- about 8 percent of the workforce -- as part of a larger restructuring strategy. Mobile phone makers Nokia and RIM, which are rapidly losing market share to Apple's iPhone and devices running Google's Android operating system, also have announced job cuts. Nokia executives in June said the company was cutting 10,000 positions, while officials with BlackBerry maker RIM in July said they, too, were eliminating jobs, possibly as many at 5,000.



 

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