Cisco says it will end the year with roughly the same headcount it started with, but the mix will be different.
Cisco continues to realign workforce
Cisco wants to become more of a software company, and that means employees in some legacy businesses will lose their jobs. Today the networking giant said that it will cut 6,000 jobs to make room for new hires in its software, security, cloud and data center business lines. Cisco did not say exactly which areas would be cut. The company did say that some emerging markets have performed poorly, leading to speculation that these areas may be targeted.
This is the second summer in a row that Cisco has announced job cuts along with its fiscal fourth quarter results. At this time last year, Cisco said it would cut 4,000 jobs. That followed 11,500 cuts announced in 2011. Right now the company employs roughly 75,000 people.
Cisco CEO John Chambers reportedly said during the company’s earnings call yesterday that Cisco expects to end this year with about the same headcount it had at the beginning of the year. But the mix of employees will be different as the company shifts more resources to software.
Cisco also said during its earnings call yesterday that sales of both routers and switches declined during the most recent quarter. On the telecom and wireless side, some analysts are predicting a weak second half for router sales as companies try to move to more software-based networking solutions.
“Although new routers (16% of sales) ramped nicely, this segment was light and the outlook appears challenged from weak carrier spending trends,” noted analyst Simon Leopold of Raymond James Equity Research. “Our longer-term thesis is that Cisco has the right strategy focused on an evolution towards more software centric networks.”
That strategy has included an aggressive acquisition program in recent months. In June, Cisco announced plans to pay $175 million for Tail-f Systems, one of the companies tapped by AT&T to help virtualize its network. Cisco has also purchased Meraki for Wi-Fi and cloud services, Ubiquisys for small cells, Intucell for self-optimizing network technology and BroadHop for policy control solutions.
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