Cisco Plans for 1,300 Layoffs

by Jordan Richardson on July 24, 2012

A few months after it warned that it was getting more difficult to close sales with customers due to “growing economic uncertainty,” Cisco Systems is preparing to layoff roughly 1,300 workers. That accounts for about two percent of its workforce.

Cisco didn’t say what countries would be impacted by the layoffs, but the move comes after the hiring of new chief strategy officer Padmasree Warrior and what looked like an upswing in company fortunes that solidified CEO John Chambers’ post.

For Cisco, the layoffs come as part of a streamlining process. The company says that it’s also adjusting to changing economic climates.

“We routinely review our business to determine where we need to align investment based on growth opportunities,” the San Jose-based company said in a statement. “Additionally, we continue to evaluate our organizational structure as part of our plan to drive simplicity, speed of decisions and agility across Cisco.”

Last year, Cisco cut 10,000 jobs as part of austerity measures. That round of cuts was expected to net about $1 billion in annual savings.

This latest round of cuts follows Cisco’s offering of revenue guidance for the current fiscal quarter. The company informed shareholders and investors that revenue for the period ending this month was only expected to increase by two percent from the same time period last year. Analysts had predicted Cisco to have a revenue increase of about seven percent for the time frame, but the company anticipated the disappointment and offered guidance to shareholders.

Chambers, through it all, maintained that the company would have to make some adjustments to deal with the economic downturn. The “rapidly shifting economic conditions” – or lack of macroeconomic growth – were beyond Cisco’s control and buyers of networking gear were particularly less likely to make purchases due to fluctuating fiscal realities.

“I don’t think 1,300 by itself is going to make a dramatic difference,” analyst Erik Suppiger said in an interview. “Until they start generating healthier top-line growth or reverse some of the gross-margin pressures that they’ve seen, I think they’re going to have to start very aggressively focusing on their operational efficiencies.”

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