U.S. internet gear maker, Cisco Systems, said on Wednesday it would eliminate up to 5,500 job positions, about 7 percent of its global workforce under its restructuring plan.
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The dismissals amount to about 7 percent of Cisco’s total workforce and the company will start eliminating those jobs in the ongoing quarter.
Cisco Systems is reportedly considering shedding its global workforce by almost 20 percent with the lose of up to 14,000 jobs.
The San Jose, California, company is now focusing more on equipment tailored for large data centers and pouring more resources into software and security. The company said that for the quarter that ended July 30, it earned $2.8 billion, or 56 cents a share, on sales of $12.6 billion, compared with a profit of $2.3 billion, or 45 cents, on $12.8 billion in sales in the same period a year earlier. Analysts project a 2 per cent decline in sales to US$12.6 billion.
News of the layoffs comes as the vendor gets ready to report its fiscal second quarter earnings results after the market closes on Wednesday. However, the company’s net profit rose to US$2.81 billion ($3.67 billion), or 56 United States cents per share, in the fourth quarter ended July 30.
Cisco Systems opened for trading at $30.98 and hit $31.24 on the upside on Monday, eventually ending the session at $31.19, with a gain of 1.04% or 0.32 points.
The networking giant said the cuts would reduce its costs while allowing the company to invest in faster growing tech segments, such as cloud computing and security.
The cuts shouldn’t come as a huge surprise to those that have kept tabs on Cisco’s business operations.
In April the company employed approximately 73,100 people, according to Bloomberg.
Cisco reportedly expects to record pretax charges of up to $700 million in severance and termination benefits.
The CRN report claims that the move to software calls for employees with different skill sets. Many early retirement plans have already been offered to employees, the website reported. Though the company laid off 6000 jobs in 2014, it did not cut any jobs a year ago.
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The employees who have been losing their jobs throughout technology have been highly successful in finding other positions in the industry, as long as they have training in technical fields, said Todd Thibodeaux, CEO of CompTIA, a trade group that tracks industry employment.
