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Cisco to Lay off 6,000 Employees After Disappointing Fiscal Fourth Quarter

Daily Insight | Jennifer Clark | August 15, 2014

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During a recent conference call discussing its fiscal fourth-quarter earnings, Cisco announced that it would be cutting jobs in hopes of returning the world’s largest networking-equipment maker back to prominence. Cisco reported a fourth quarter revenue of $12.4bn, which is down 0.5% from the previous year.

 

According to Telecompaper, Cisco currently plans on eliminating roughly 6,000 positions, or 8% of its current workforce, at a restructuring cost of $700m.  Cisco CEO John Chambers declined to comment on which areas of business would be affected by the latest round of layoffs, but he did tell the Wall Street Journal that “the job cuts are designed to make room for adding different kinds of skills, rather than lowering costs.”

 

451 Research VP Jennifer Clark comments

 

“Facing a dull second quarter result, Cisco has been doing what it can to maintain share price and return value to its investor including buying back stock  ($1.5bn in the quarter) and making dividend payments ($974m for the quarter).  The company has made 25 acquisitions since the beginning of 2012. It is the leader in SDN/NFV focused acquisitions since 2012 in terms of both number of acquisitions – seven – and spending on SDN/NFV acquisitions – approximately $4.789bn.  It is probably past time for the company to make a correction in the headcount number – which is no consolation for the 6000 that will be affected.”

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