SAN FRANCISCO-Cisco Systems, the computer-networking giant that is in the midst of a major technological pivot, on Wednesday said it will eliminate up to 5,500 jobs.
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This could be the second biggest job cut after Intel’s 12,000 that happened in April this year.
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. No details were immediately given as to how many jobs Cisco plans to shed in the Bay Area.
Following several quarters of low growth on the networking side of the business, management made a decision to change tack and embrace cloud software, announcing 5,500 jobs were to go as a result, starting in the first quarter of fiscal 2017.
Like fellow tech behemoths Oracle and IBM, Cisco finds itself wrenching toward a shift of business to fledgling markets such as cloud computing and the Internet of Things.
Cisco’s data-center revenue for last quarter was down 1 percent, and its routing revenue was down 6 percent. The product revenue was boosted by security services at 16%.
Cisco Systems Inc.is planning to lay off 5,500 employees worldwide after reporting a 2 percent drop in revenue.
“It’s part of what we’re driving in our shift to software”. The new emphasis is being orchestrated by CEO Chuck Robbins, who replaced the Cisco’s long-time leader, John Chambers, almost 13 months ago.
Robbins, who took over in July 2015, has been working to rekindle growth by shifting Cisco toward software-based networking, security and management products, which customers increasingly prefer because they’re less expensive and more versatile.
Underlining Cisco’s struggles to revitalize growth, the company Wednesday reported fourth-quarter sales that declined 2 percent from a year earlier in a “challenging macro environment”.
It said any cost savings from these reductions would be plowed back into the above businesses, and that the company would “continue to aggressively invest to focus on our areas of future growth”.
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The layoffs come amid solid stock performance, with Cisco shares hitting a three-month high of $31.23 prior to the news of downsizing.
