Cisco Systems will cut 4,000 jobs, about 5% of its workforce, because the company is not satisfied with the speed in which the economy is recovering, CEO John Chambers said Wednesday during the company’s fourth quarter earnings call.
Citing an inconsistent global macro-economic environment, he said the company is seeing “slow, steady improvement, but not at the pace we want.” 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.
Chambers shared the news as Cisco announced that fourth quarter earnings rose to $2.23 billion (42 cents per share) on revenues of $12.42 billion, up from $11.69 billion.
The news sparked a sell-off, as Cisco shares dipped $2.49 (9.43%) to $23.89 each in after-hours trading Wednesday.
Word of the new 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 include 2,100 employees who elected to a voluntary, early retirement program. Cisco announced in March of this year that it would cut 500 jobs.
Cisco, a key maker of networking equipment and cable access gear and set-tops, said its primary switching business brought in $3.8 billion, up 5%, year-on year, while its NGN routing business was flat, at $2.09 billion. Cisco’s service provider business, which continues to get a lift from the $5 billion acquisition of NDS, pulled down $1.18 billion in the quarter, up 23%.