The corporate restructuring aims to cut expenses in “lower growth areas” and shift the money into Cisco priorities such as security, cloud computing, data centers, and the internet of things, according to Robbins.
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Cisco projected flat revenue in the first quarter and gave an earnings forecast that was shy of analysts’ estimates, saying it expected adjusted earnings of 58 cents to 60 cents per share, versus Wall Street estimates of 60 cents.
The plan to eliminate 5,500 positions came as earnings reports showed Cisco’s profit for the fiscal year climbed to $10.7 billion, 20 percent more than the previous year.
According to multiple rumours, it’s been claimed that the network kit giant is preparing to announce cuts to between 9,000 and 14,000 employees within the next few weeks, while early retirement packages are apparently already being offered to many staff. The company said it will take charges totaling about $700 million associated with the restructuring.
“They need different skill sets for the software-defined future than they used to have”, an anonymous source told CRN.
Cisco slightly beat analysts estimates with a quarterly profit of $2.8 billion, or 63 cents a share, on revenue of $12.64 billion.
“We are investing in every area of business we have”, Kramer said. “At the same time, we actually are working very diligently on bringing innovation to our core.So it’s not that we’re ignoring one in favor of another, we just want to make sure our investments are commensurate with our growth opportunity from a relative perspective”, he said.
Cisco has today confirmed the company will cut up to 5,500 positions – nearly 7% of the company’s global workforce. “They’re not overall declining”.
Cisco Systems Inc said it would cut almost 7 percent of its workforce, posting charges of up to $400 million in its first quarter, as the world’s largest networking gear maker shifts focus away from its legacy hardware towards higher-margin software. The company’s Europe, Middle East and Africa sales region suffered a 3% decline in product orders in the fourth quarter. The company last announced a large round of firings in August 2014, when it eliminated about 6,000 positions.
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The headcount reduction was much less than some analysts had speculated and in line with a more typical annual cut of 5%, Simon Leopold, an analyst at Raymond James, said in a note. Cisco’s workforce is down from the 75,000 it employed in 2013.
