Cisco (CSCO) is clearly in the process of transforming its business, and the changes are prompting the networking giant to shift its workforce. CEO John Chambers says that in order to “rebalance” its employee base Cisco will lay off 4,000 people, or 5% of its workforce.
Chambers made the announcement during Cisco’s quarterly earnings conference call. Revenue and earnings both came in at record levels; Cisco earned $2.3 billion on revenue of $12.4 billion. Those numbers were in line with Wall Street’s expectations, but nonetheless investors pummeled Cisco’s stock after Chambers said that Cisco will lay off 5% of its workforce in order to hit its earnings projections in the current economic climate. He described the recovery as “inconsistent” and “slow.”
The company did not say which parts of its business will be impacted by the layoffs. During recent years, Cisco has expanded its focus from networking gear to software and mobile connectivity hardware. Recent acquisitions include Meraki, a maker of cloud managed Wi-Fi access points, which Cisco purchased for $1.2 billion dollars last year, as well as small cell vendor Ubiquisys ($310 million), self-organizing-software provider Intucell ($475 million), and BroadHop, a Colorado company that provides policy control solutions.
Chambers said during the earnings call that some of the 4,000 affected workers will be “allocated to new growth opportunities.” He spoke about the need to make and implement business decisions quickly, and said that requires small teams. “We just have too much in the middle of the organization,” he said.
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