Cisco Systems plans to lay off about 7 percent of its global workforce in a restructuring that will see it further focus on hot IT areas such as the internet of things, security, collaboration, next-generation data centers, and the cloud. In the previous year Cisco has purchased 10 companies, many of which offer cloud-based services to connect or secure internet enabled equipment and devices.
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A Cisco office is pictured in San Diego, California, in this November 12 2012 file photo.
The company announced Wednesday that it will cut approximately 5,500 jobs as part of a restructuring plan. “It’s not that we’re ignoring one in favour of another”.
Cisco built its fortune on hardware for private data centers, but businesses are increasingly turning to “super-clouds” such as Amazon Web Services and Microsoft Azure which rent processing muscle as needed, according to the analyst.
“We need to make some pretty immediate shifts in our portfolio”, Cisco CEO Chuck Robbins said.
IBM, for instance, dawdled during the early phases of the move away from mainframe computers, resulting in a traumatic overhaul that began in the 1990s and continues today. Cisco historically has made sizable layoffs public at the end of its fiscal year.
But staff affected by the restructuring will no doubt be annoyed at the loss of their jobs and the upbeat statement from Robbins, considering Cisco has reported a very healthy rise in its net profits.
Earlier unconfirmed reports on Bloomberg said that Cisco would lay off 14,000 jobs; the company later said it was laying off 5000 employees. “Beyond that, Cisco does not comment on details of its job actions”.
The networking giant, while it generated $48.7 billion in revenue in 2016, is still getting left behind by its software-focused rivals.
Excluding one-time items, Cisco earned 63 cents a share, which topped the 60-cents-a-share estimate forecast by analysts surveyed by Thomson Reuters.
Sales in its biggest business unit, switching, increased 2 percent to $3.8 billion while routing, the second-largest revenue source, fell 6 percent to $1.9 billion.
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Cisco also said it expects adjusted first-quarter earnings to come in between 58 cents and 60 cents per share.
