Cisco to cut another 6,000 jobs as forecast falls flat

Thursday 14 August 2014 09.01
Cisco Systems plans to cut another 6,000 jobs worldwide
Cisco Systems plans to cut another 6,000 jobs worldwide

Cisco Systems has forecast tepid quarterly results and said it plans to cut another 6,000 jobs.

The news comes as the network equipment maker works through a transition toward a new cycle of high-end switches and routers. 

The latest round of layoffs is at least the third workforce reduction in about as many years for a company once synonymous with the Internet boom, but which has lately struggled to sustain growth. 

The company announced in August 2013 that it would cut 4,000 jobs. And in 2011, it said it planned to reduce its workforce by more than 11,000. 

"The market doesn't wait for anyone. We are going to lead it, period," CEO John Chambers told analysts on a conference call. 

"The ability to do that requires some tough decisions. We will manage our costs aggressively and drive efficiencies," he added. 

Chambers partly blamed the cuts on the uncertainty in global demand. In emerging markets, where the company faces sluggish sales and increased competition, Cisco saw continued challenges. China product orders fell 23%, and Brazil had 13% declines.

"Unfortunately, as we look out, we don't see emerging markets growth returning for several quarters and believe it could get worse," said Chambers. 

Total product orders rose 1%, with 2% growth in both the Americas and Europe, the Middle East and Africa, offset by a 7% decline in Asia and Pacific. 

Cisco's high-end routers and switches declined 7% and 4% year-over-year, respectively, as customers were slow to order a new series of products. Its data centre revenues rose 30%, and security sector revenues rose 29%. 

Security revenue was boosted by the acquisition of SourceFire, a cyber security firm Cisco acquired in October 2013. 

Cisco also forecast earnings per share of between 51 cents and 53 cents for its current, fiscal first quarter. It predicted flat to 1% growth in revenue for the period. 

Cisco posted a smaller than expected 0.5% dip in fiscal fourth-quarter revenue to $12.4 billion. Wall Street on average had expected $12.1 billion. That beat the company's previous guidance for a decline in revenue of between 1-3% for the quarter.