Cisco Layoffs, In what appears to be the biggest layoff by a Silicon Valley company this year, networking giant Cisco Systems (CSCO) on Wednesday announced it will cut 4,000 employees — about 5 percent of its global workforce — which comes on top of nearly 8,000 previous job cuts in the past two years.
Despite being Silicon Valley’s fourth-biggest corporation in revenue, Cisco has run into trouble due to intense competition in some of its markets and because the sluggish global economy prompted many companies to scale back purchases of its products.
While acknowledging that the San Jose company’s progress continues to be hindered by the “challenging and inconsistent” global economy, Cisco CEO John Chambers said the main reason for the layoffs was to whittle down the layers of people in Cisco’s various divisions, some of which have been slow to respond to technological changes.
“We just have too much in the middle of the organization,” he said. “We’ve got to speed time to market. Small teams move much faster.”
Cisco identified cybersecurity, data centers, video and Internet or so-called cloud-based products as ripe for expansion. The company said some of the laid-off employees would be rehired for its high priority businesses, but declined to say how many.
“I’m very pleased with how we are operating,” Chambers said in a conference call with analysts to announce its quarterly earnings, where it reported record sales and an 18 percent jump in profit from a year ago, although its shares fell nearly 10 percent after the earnings report. “I’m very comfortable with our momentum. It’s just not fast enough.”
Baird Equity Research analyst Jayson Noland said Cisco’s workforce reduction “makes sense
generally” because it’s “very important for large companies to innovate quickly, given the landmark changes across IT, and I can appreciate that layer upon layer of management tends to get in the way.” But he said it’s hard to evaluate Cisco’s plans since Chambers was vague on some details.