Cisco cuts 6,500 jobs, 9% of workforce

Cisco Systems will axe 6,500 jobs worldwide, cutting 9% of its workforce, as part of a cost-cutting exercise.

Cisco Systems will axe 6,500 jobs worldwide, cutting 9% of its workforce, as part of a cost-cutting exercise.

In May 2011, the company warned that profit and sales in the current quarter may miss analysts' estimates. At the time, Cisco Systems chief executive John Chambers said he would cut jobs in anticipation of lower public sector spending.

In a statement, the company said it needed to "take out $1bn in costs" from its fiscal 2012 expense run rate. Cisco has tied this to the size of its workforce.

"We plan to reduce our global workforce by approximately 6,500 employees across all functions, which includes approximately 2,100 employees who elected to participate in a voluntary early retirement programme," said Cisco.

The job cuts include reducing its executive-level staff by around 15%.

"While these decisions do not come easily, we believe we have the right-sized organisation and realigned our workforce to support our priority areas, while retaining the capabilities and talent to effectively support our long-term strategy," the statement continued.

Earlier this month, reports suggested Cisco Systems may cut as many as 10,000 jobs, roughly 14% of its workforce, to combat weak profit growth.

Cisco also said at the time that it expected profit to be 37 to 39 cents a share in the fourth fiscal quarter, and sales to be between $10.8bn and $11.1bn, below average analyst predictions of 41 cents profit and sales of $11.6bn. In 2010, the company grew its revenues by 11%.

Earlier this year, Chambers announced plans for a company shake-up, saying Cisco would refocus on its core markets in routers and switching, collaboration, datacentre virtualisation and video.

Shortly after, the company closed down its Flip video camera business, confirming that its consumer division is a top target in the planned company revamp.

Cisco has also announced it has formed an agreement with Foxconn to take ownership of its 5,000-person manufacturing facility in Mexico to simplify its operations and manufacturing process.

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