U.S. tech giant Cisco Systems is cutting up to 7% of its global workforce, or 5,500 jobs, starting this summer.
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Cisco’s director – systems engineering for Service Provider, India and SAARC, Lalit Chowdhary also quit the company, while Jaswant Boyat, technical director heading Systems Engineering for Service Provider, India & SAARC also resigned and joined Huawei Technologies as director – IP Network Solution Sales.
Revenue at Cisco’s routers business fell 6 percent in the fourth-quarter ended July 30, while switching unit revenue was up 2 percent.
Cisco plans to reinvest the money saved from the job cuts in “key priority areas” for the company, including developments in the “internet of things” (connecting everyday objects to the internet), next generation data centres and cloud computing technology.
In the first quarter of 2016, Cisco projected flat revenue and expected adjusted earnings of 58 to 60 cents per share.
Robbins, who took over from John Chambers in July a year ago, has been steering Cisco toward more software and subscription-based services. Robbins said security posted a revenue gain of 16% this quarter and gross and operating margins have improved.
“It’s part of what we’re driving in our shift to software”, said Chief Financial Officer Kelly Kramer. “Those businesses have great margins and it’s part of the overall transition”.
The company outlined the job cuts plan in a fourth quarter trading update which shows it generated revenues of $12.6 billion in Q4, down two per cent on last year, though full year revenues were up three per cent to $48.7 billion and full year net income was up 20 per cent to $10.7 billion. Profit, meanwhile, increased to $2.81 billion, equivalent to 56 cents per share, compared with $2.32 billion, or 45 cents per share, in the fourth quarter of the previous fiscal year.
The 52 week high of shares in Cisco Systems, Inc.is 31.25 while the 52 week low for the company’s shares is 22.46. Earlier they had fallen 1.3 percent to $30.72, leaving them up 13 percent this year.
On the whole, the company expects a pretax charge of up to $700 million for severance and termination benefits.
A report had suggested earlier in the day that the firm could cut as many as 14,000 jobs worldwide.
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The network equipment maker is laying off about 14,000 employees, almost twenty percent of its global workforce, according to technology news site CRN, which is citing sources close to the company.
