Cisco's Restructuring Plan Includes Cutting 6,500 Jobs

By CIOinsight  |  Posted 07-19-2011 Print Email
Cisco will cut 9 percent of its workforce starting in August, according to officials. In addition, another 5,000 jobs will be shed after Cisco sells a manufacturing plant in Mexico to Foxconn.

Cisco Systems executives will cut 6,500 jobs starting in August as part of their efforts to reorganize and streamline the company after several quarters of disappointing financial numbers.

The networking giant announced July 18 that about 9 percent of the company's 73,000 employees will lose their jobs, with about 2,100 leaving via a voluntary early retirement program. In addition to the 6,500 job cuts, Cisco (NASDAQ: CSCO) will lose another 5,000 employees with the sale of its set-top-box manufacturing plant in Mexico to China-based Foxconn Technology Group, which is best known for building such devices as Apple's iPhones and iPads.

None of the employees at the facility in Juarez, Mexico, were expected to lose their jobs, according to Cisco officials. Instead, they will become employees of Foxconn.

There has been speculation about job cuts since earlier this year, when Cisco Chairman and CEO John Chambers, following another difficult financial quarter, said changes needed to be made to get the company moving in the right direction. Cisco had seen several quarters of disappointing revenue and forecasts, prompting Chambers to write a lengthy memo to employees about the need to make changes.

Soon after, Cisco restructured its consumer business, including shuttering its profitable Flip video camera unit, a move that cost about 550 jobs. In May, Cisco reorganized its sales, services and management units. Later that month, Chambers, while talking with journalists and analysts about the quarterly financial numbers, said more streamlining was needed, and that that would include job cuts. The reductions are part of a larger plan to save $1 billion in operating expenses this year.

Analysts earlier this month said the job cuts could number between 5,000 and 10,000.

"While this is a difficult decision to make, in our view, it is required in order to maintain the competitiveness of Cisco going forward," Gleacher & Co. analyst Brian Marshall wrote in a research note July 11.



 

Submit a Comment

Loading Comments...