News
Reports that the company planned to cut up to 14,000 jobs appear to have been somewhat exaggerated.
Reports that Cisco planned to cut up to 14,000 jobs turned out to be slightly wide of the mark, after the U.S. networking giant said it would in fact be cutting “only” 5,500 jobs or 7% of its global workforce.
The company announced the job cuts during the presentation of its fourth-quarter and fiscal year 2016 results, when it reported a 2% decline in Q4 revenue to $12.6 billion in what it described as a “challenging macro environment.” Q4 net income, on the other hand, grew to $2.81 billion from $2.32 billion a year ago.
The planned job cuts are set to take place from the first quarter of fiscal year 2017 and form part of the company’s restructuring plan as it transitions from a hardware-focused to a software-centric organisation. Cisco said charges associated with the restructuring would be about $700 million, of which $400 million would fall in the first quarter of fiscal 2017.
Cisco was also forced to deny rumours that it had leaked false layoff figures in order to lessen the impact of the actual announcement, according to MarketWatch.
A report from CRN earlier this week cited “multiple sources close to the company” saying that Cisco planned to slash up to 14,000 jobs or close to 20% of its global workforce.
Cisco responded by citing laws that would preclude such communications ahead of an official disclosure, the news agency said.
“Cisco understands its disclosure responsibilities and refutes the suggestion,” a Cisco spokesman told MarketWatch.
Cisco CEO Chuck Robbins said the company needed to “make some pretty immediate shifts in our portfolio,” Bloomberg reported.
“We have rapidly shifting customer expectations. The winners in the future will be the ones that understand those dynamics,” Robbins said.
David Heger, an analyst at Edward Jones & Co, told Bloomberg that Cisco is “plodding along.”
“They’re not overall declining. That’s a signal that they’re managing the transition fairly well,” Heger said.
Cisco projected flat revenue for the first quarter of fiscal 2017. Reuters noted that it gave an earnings forecast that was shy of analysts’ estimates, saying it expected adjusted earnings of 58 cents to 60 cents per share, compared to Wall Street estimates of 60 cents.
