Cisco laying off 5500 employees, or 7 percent of workforce

Cisco said: “The restructuring will eliminate up to 5,500 positions, representing approximately seven percent of our global workforce, and we will take action under this plan beginning in the first quarter of fiscal 2017”.

Earlier there were rumours that the company may lay off about 14,000 employees, or almost 20 percent of the network equipment maker’s global workforce. The San Jose, Calif. -based company laid off 6,000 in a restructuring in 2014. Cisco reported quarterly earnings of $2.8 billion, or 56 cents a share, on sales of $12.64 billion; after adjusting for share-based compensation and other costs, the company claimed profit of 63 cents a share.

Cisco grew revenues two per cent year on year to $12.6bn in its Q4 ending 30 July 2016, excluding a recently divested chunk of its service provider video business.

Apparently due to the announced job cuts, Cisco stock traded 1.09% lower at $30.39 as of 11:30 AM EDT today. Its second-largest division, routing, suffered a 5 percent drop in sales to $1.89 billion, the company said.

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. Even so, Robbins said the company still has a long way to go and that earnings are not where they should be.

“The shift to California is undeniable”, said Eric Noble, president of the CarLab consulting firm. And although security and collaboration businesses saw the fastest growth rates, each up 13% and 9% year-over-year respectively, they only accounted for about 13% of total revenue.

Revenue fell to $US12.64 billion from $US12.84 billion. Cisco now employs roughly 73,000 people, according to data compiled by Bloomberg.

Following several quarters of low growth on the networking side of the business, management chose 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.

It is said to require “different skill sets” for this “software-defined future” as it vies to increase market share and boost profit margins.

The company has focused more of its attention on its firewall business that offers computer protection software.