Cisco Systems is laying off thousands of employees as it moves to drive software growth in new areas like security and internet of things, according to multiple sources close to the company.
San Jose, Calif.-based Cisco is expected to announce the cuts within the next few weeks, as many early retirement package plans have already been offered to employees, said sources. Cisco is set to announce its fourth fiscal quarter results after the market closes tomorrow.
The cuts stem from Cisco’s transition from its hardware roots into a software-centric organization.
Editor's note: This story was updated after Cisco Wednesday disclosed plans to lay off up to 5,500 employees in a restructuring plan that it will implement this quarter.
[Related: Cisco Earnings Preview: Microsoft Integration, Security Growth And Switching Revenue Decline]
"They need different skill sets for the software-defined future than they used to have," said one source familiar with the situation, who declined to be identified. "In theory the addressable market could be higher and margins richer, but it will take some time to make this transition."
Cisco declined to comment.
The company's headcount as of April 20, 2016, was 73,104, according to a filing with the U.S. Securities and Exchange Commission.
Wall Street analyst Trip Chowdhry of Global Equities Research predicted in a January report that Cisco would cut 14,000 employees in 2016. Chowdhry said the cuts would be due to the company not needing as many employees in the back-end process as more customers transition to the cloud as well as Cisco being late to enter the cloud market.
The networking leader has a history of announcing layoffs at the end of its fiscal year each summer. In August 2014, Cisco revealed plans to cut 6,000 jobs, roughly 8 percent of its total workforce at the time. In August 2013, the company cut 4,000 employees, about 5 percent of its global workforce at the time. Cisco also cut 1,300 positions in July 2012. One of Cisco’s largest layoffs came in July 2011, when the company cut 6,500 employees, representing about 9 percent its global workforce. Cisco had no layoffs in the summer of 2015, coinciding with Chuck Robbins' ascension to CEO that July.
Cisco’s stock has increased more than 15 percent over the past three months and hit a nine-year high on this week at $31.23 per share.
related stories
Video
trending stories
sponsored resources

Cysurance
Cyber Insurance 360

Carbonite
Cloud Storage 360

Application Integration 360

Tenable
Cyber Risk 360

NPD
Industry Trends 360

Channel Chief Showcase

Smart 3rd Party
3rd Party Maintenance 360

Cradlepoint
5g for Business 360

Cato Networks
SASE & SD-WAN 360

Trend Micro
Trend Micro Learning Center

CyberPower
CyberPower

Veeam
Veeam

Comcast Business
Comcast Business Learning Center

Dell Technologies
Dell Technologies Storage Learning Center

Fujifilm
Fujifilm

BlackBerry
BlackBerry Learning Center

Acer
Remote Workforce 360

Webroot
Webroot Learning Center

Comm100
Collaboration & Communications 360

Partner Program Guide Showcase

Dell Technologies
Microsoft HCI Solutions from Dell Technologies Learning Center

Hitachi Vantara
Hitachi Vantara

eSentire
Managed Detection and Response 360

Terranova Security
Cybersecurity 360

N-able
MSP Automation Solutions 360

CRN Showcase

APC by Schneider Electric
Digital Services for Edge Learning Center

Dell Technologies
Dell Technologies Server Learning Center

Dell Technologies
Dell Technologies Cloud Learning Center

Cyber Protection 360

VMware

EPOS
EPOS

Sophos
Sophos Cybersecurity Learning Center

Vonage
Vonage

Sherweb
Sherweb

Vertiv
Edge Computing Learning Center

Wasabi
Wasabi

iboss
Cloud SASE Platform 360
