Cisco To Shed 4,000 Jobs, Shares Plummet


Cisco shares plummeted more than 9 percent to $23.92 in after-hours trading Wednesday after the company announced plans to shed 4,000 jobs -- or about 5 percent of its global workforce -- starting in its fiscal first quarter of 2014.

On Cisco's fourth-quarter earnings call with analysts Wednesday afternoon, CEO John Chambers declined to specify which geographies or product groups within Cisco would be affected by the cuts.

"We aren't going to share any detail now or in the near-term future on which geographies will be affected or at which level," Chambers said on the call.

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The layoffs -- which Cisco referred to as a "workforce rebalance" -- are meant to create a leaner, more agile Cisco, Chambers said, noting that business has been improving given the broader macroeconomic environment, "but nowhere near the pace that we want."

"The most difficult decision we make as leaders are those that impact our employees. However, we will always take the necessary actions to efficiently manage our business for the long run," Chambers said. "Consistent with what we've said over the past two years, we are positioning Cisco to accelerate and lead with greater speed, flexibility and agility."

Cisco has made several trims to its workforce over the past two years. In March, Cisco announced plans to cut 500 jobs from its global ranks, adding to the roughly 1,300 job cuts it made in July 2012 and the 6,500 cuts it made in July 2011. These first two rounds of layoffs were part of Cisco's broader strategy, at the time, to trim approximately $1 billion in expenses.

The layoffs weren't attributed to any specific decline in a Cisco product segment or geography, but the company did report that fourth-quarter revenue for its NGN Routing and Security segments was flat year-over-year. Cisco also reported a year-over-year decline in product orders within its U.S. Service Provider segment, along with a 3 percent drop in product orders in its Asia/Pacific and China customer segment.

Overall, Cisco reported fourth-quarter revenue of $12.4 billion, up 6.2 percent compared to the same quarter last year, along with a net income of $2.3 billion, up 18.4 percent compared to the same quarter last year.

For its full-year fiscal 2013 results, Cisco reported revenue of $48.6 billion, up 5.5 percent compared to its annual revenue last year, and a net income of $10 billion, up 24.2 percent compared to its net income last year.

Bright spots for the quarter included Cisco's Wireless segment, which saw revenue jump 32 percent compared to the year-ago quarter, along with its Data Center segment, which saw revenue jump 43 percent compared to the year-ago quarter, an increase Chambers attributed to Cisco's recent traction in the x86 blade market.

"We are pleased to have moved into the No. 2 position worldwide in the x86 blade market, with approximately 20 percent market share, something our peers would have considered impossible a couple of years ago," Chambers said.

Cisco said it expects revenue for its fiscal first quarter to rise between 3 percent and 5 percent, totaling between $12.23 billion and $12.47 billion.

PUBLISHED AUG. 14, 2013