Cisco to cut 6,000 more jobs as forecast falls flat

Aug 14, 2014, 1:24 AM EDT
Cisco CEO John Chambers delivers the keynote address during the Cisco Live! conference on May 19, 2014 in San Francisco, California.
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Cisco Systems Inc forecast tepid current-quarter results and said it plans to cut another 6,000 jobs, as the network equipment maker works through a transition toward a new cycle of high-end switches and routers.

The latest round of layoffs is at least the third workforce reduction in about as many years for a company once synonymous with the Internet boom. As Reuters reports:

“The market doesn’t wait for anyone. We are going to lead it, period," Chief Executive Officer John Chambers told analysts on a conference call. "The ability to do that requires some tough decisions. We will manage our costs aggressively and drive efficiencies.”

Chambers partly blamed the cuts on the uncertainty in global demand. In emerging markets, where the company faces sluggish sales and increased competition, Cisco saw continued challenges. China product orders fell 23 percent, and Brazil had 13 percent declines.

"Unfortunately, as we look out, we don’t see emerging markets growth returning for several quarters and believe it could get worse," said Chambers.

Total product orders rose 1 percent, with 2 percent growth in both the Americas and Europe, the Middle East and Africa, offset by a 7 percent decline in Asia and Pacific.

The company is also being nudged to embrace software rather than the hardware it is known for. From Bloomberg News:

Goldman Sachs Group Inc., Verizon Communications Inc. and Coca-Cola Enterprises Inc. are telling the world’s largest networking-gear maker that they won’t keep paying for expensive equipment, when software can squeeze out more performance and make the machines more versatile.

“What we spent on your gear last year is not what we’re going to spend on your gear this year, unless you do something really different,” Martin Chavez, chief information officer at Goldman Sachs, recalled telling Chambers earlier this year.

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