Cisco lays off hundreds in San Jose: reports

Cisco Systems (NASDAQ: CSCO) reportedly laid off up to 700 employees last week from its San Jose, Calif. headquarters.

According to several reports, including the Wall Street Journal and MarketWatch, the workforce reduction is part of the 1,500 to 2,000 positions earmarked for elimination early this year. Cisco is looking to cut between $1 billion and $1.5 billion in expenses during the economic downturn, which is hammering sales.

A Cisco Canada spokesperson said 27 Canadian employees “were impacted” by the cuts, which were previously announced.

Last year, investment banker UBS published a report stating Cisco had closed its office between Christmas and New Years as part of a plan to save $1 billion.

Last year, the company had net earnings of $8 billion on revenues of $39.5 billion. All figures are in U.S. dollars.

In May, the company reported revenues for the first nine months of this fiscal year were $27.58 billion and net income so far was $5 billion. For the third quarter, which ended April 25, revenue was $8.2 billion, down 17 per cent from the same period in 2008 and down 9.9 per cent from $9.1 billion for the second quarter, which ended Jan. 24. Cisco has made a profit of more than $1 billion every year since 1998, except for 2001, when it lost $1 billion. Both revenues and net earnings increased significantly every year since 2002 (when it made $1.9 billion on revenues of $18.9 billion), except for 2006, when profit was $5.6 billion, down from $5.7 billion in 2005.

The firm is expected to record another double digit decline in sales for its fiscal fourth quarter, which ends later this month.

Cisco acknowledged that it let some employees go this week but did not confirm the numbers in the various reports. Speculation has been swirling that the axe would fall at Cisco.

“This limited restructuring is part of our ongoing, targeted realignment of resources and was previously discussed on our fiscal second and third quarter 2009 earnings calls,” a company spokesperson stated in an e-mail to Network World. “While Cisco constantly manages its business priorities, resources and overall employee alignment as part of our overall business management process, we are sensitive to the impact these decisions have on employees during this challenging economic environment. We are doing everything possible to minimize the impact on employees affected by the limited restructuring.”

Cisco has been quietly engaging in limited restructurings throughout the year, some related to the 1,500 to 2,000 positions publicy disclosed, and others not.

Founded in 1984, Cisco had US$7.4 billion in cash as of April 25.

With files from Greg Meckbach

Network World (US)

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