Cisco Begins 5% Layoff

Company Starts To Notify Employees Of Cuts That Will Affect About 4,000 Workers

Cisco Systems confirmed that it has begun to notify employees of a layoff and reorganization that will end up cutting about 4,000 jobs, or 5%, of the company’s global workforce.

Cisco CEO John Chambers warned of the coming cuts during the company’s fiscal fourth quarter earnings in mid-August, noting that the company was not satisfied with the speed at which the economy is recovering. He stated that Cisco’s long-term financial model calls for profitable revenue growth of 5% to 7%, but anticipates growth of 3% to 5% in the current quarter.

Cisco reiterated that message today.

“In the past two years we have managed the business with discipline and focus,” Cisco spokeswoman Robyn Jenkins Blum said in a statement to Multichannel News. “As we communicated during Cisco's Q4 conference call on August 14, in order to execute on the portfolio investment and operational efficiency opportunities we see in FY14, we are rebalancing our resources with a workforce reduction which will impact approximately 4,000 employees or 5 percent of Cisco’s global workforce.”

She said Cisco began to notify affected U.S.- and Canada-based employees this week, and expects to do the same elsewhere starting in September and “will continue notifications over the next several quarters in compliance with local laws and regulations."

Cisco did not identify which areas of the company would get hit the hardest, but added that "[a]ll Cisco business groups will be impacted by these actions.  The degree of impact on each group will vary depending on the business need."

Among recent structural moves, Cisco divided its service provider business into two units, appointing Jesper Anderson to run the SP Video Software and Solutions business, and naming former Motorola Mobility exec Joe Cozzolino to head up its SP Video Infrastructure operations.

During a keynote delivered Wednesday at the Ethernet & SDN Expo in New York, Chambers spoke of the importance of building the “app economy,” telling the crowd that the “next wave” in IT is on the horizon, offering new opportunities for companies that are equipped to ride it, and delivering “brutal” consequences if they can’t, according to Light Reading.

The new latest round of cuts comes a little more than two years after Cisco announced it would reduce its headcount by 6,500 jobs, or 9%, as part of a reorg aimed at slashing $1 billion in annual operating costs. That figure included 2,100 employees who elected to a voluntary, early retirement program. Cisco announced in March of this year that it would cut 500 jobs.