Cisco to cut 6,500 jobs

09:28, July 19, 2011      

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World's largest networking- equipment maker Cisco Systems Inc. on Monday announced that it is cutting 6,500 jobs as part of its moves to boost profitable growth.

The layoffs, representing about nine percent of Cisco's regular full-time global workforce, include some 2,100 employees who elected to participate in a voluntary early retirement program, the company said.

The cuts also include the reduction of executive staff at vice president and above level by about 15 percent.

Impacted employees in the United States, Canada and select countries will be notified during the first week of August, while the remainder of the global workforce reductions are expected to occur at a later date, according to Cisco.

"While these decisions do not come easily, we believe we have right-sized the organization and realigned our workforce to support our priority areas, while retaining the capabilities and talent to effectively support our long-term strategy," Cisco said in a statement.

"Our impacted employees will be treated with respect and receive appropriate severance benefits," it added.

Cisco estimates that the cuts will cost it 1.3 billion U.S. dollars over several quarters, consisting of severance and other one-time termination benefits.

It expects that 750 million dollars of these charges will be recognized during the fourth quarter of fiscal 2011, including approximately 500 million dollars relating to the voluntary early retirement program.

Cisco noted that the reduction of workforce is part of its plan to cut the costs by 1 billion dollars in fiscal 2012.

The company on Monday also announced that it has agreed to sell its set-top box manufacturing facility in Juarez, Mexico, to Foxconn Technology Group.

The approximately 5,000 people employed at the facility will become employees of Foxconn in the first quarter of fiscal 2012 and no job losses are expected as a result of the sale, Cisco said.

After dominating market of IP routing and switching for more than two decades, Cisco has been suffering a slow down recently with some of its main businesses moving to rivals such as Hewlett- Packard.

In early May, Cisco announced that it will simplify operations structure to focus on key growth areas. In April, Cisco's CEO John Chambers acknowledged that mistakes had been made in the company's operational execution and warned that "tough decisions" would be made to preserve its profitability.

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