Update: Cisco Layoffs In The Offing?
Cisco Systems has a new chief financial officer in Frank Calderoni, who is replacing Dennis Powell. He officially starts his gig on Friday, Feb. 15. And as all good finance folks who know how to count pennies, Calderoni might have to oversee a round of layoffs at his new employer.
Sources are telling us that the company is looking to trim headcount in divisions that are not bringing in the bucks. The cuts are going to be big enough to raise an eyebrow. I am trying to chase down the actual size of the cuts and will update the post later. I checked with Cisco’s (CSCO) public relations department and a spokesperson emailed this response:
Cisco does not comment on rumors or speculation. I can tell you however, that Cisco constantly reviews ways to streamline and optimize business processes for improved efficiency and increased shareholder value.
As discussed on Cisco’s results conference call last week, at the end of Q2 Cisco headcount totaled 64,087, a net increase of approximately 1,000 from Q1 FY’08. We will continue to invest in headcount in the areas where we see continuing opportunities for growth.
Cisco reported its fiscal 2008 second-quarter earnings earlier this month, and gave a lukewarm forecast for the remainder of the year. Wall Street analysts were disappointed by the 10 percent year-over-year growth outlined by Cisco for the April 2008 quarter.
Cisco also missed its own internal bookings targets for the first time in five years, indicating that things aren’t all that kosher, not only for the company but for the tech industry overall.
Update: In the Austin office of Cisco’s Remote Operations Services division, Cisco laid off 50 people, citing a reorganization of the ROS division, which was created in 2004 after it purchased network monitoring company, NetSolve. The Jan. 30 layoffs left 250 employees working for Cisco ROS in Austin.
Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.
Big enough to raise an eyebrow. How large? Hundreds, Thousands, Tens of Thousands?
@Tom,
I am going to wait till i get the right numbers. I refuse to speculate on the total number. I have published confirmed information and for now I am just comfortable with that.
Om,
I have said for a while that Cisco is too fat, and needs a slim-down program. Have you seen that they have had some problems with Emerging Markets? Price is a big issue in those markets, as you know. I wonder if there is any correlation? HP/IBM are going gang-busters in the emerging markets …
http://sramanamitra.com/2007/12/11/cisco-grows-fatter-shows-emerging-market-weakness-corelated/
Would be interested to hear if you find out more …
Sramana
With 70K employees, the company will have to cut at least 20% of workforce to make any meaningful
expense reduction. 5% won’t do! They can fire many first and second level managers who sit around
and collect stock options.
Price is a factor here in the US too. During a boom the ‘nobody got fired for buying Cisco / IBM’ thing works and they certainly charge a huge premium for their products. When times are tighter customers will either postpone spending on infrastructure, or at least consider more cost effective products – particularly in new technologies like 10 gig Cisco are several times more expensive than Force 10 and co…
Om,
That would be really bad for the overall outlook. As far as Emerging Markets and more so on India, I have not heard them close one big deal so far. Huawei is doing some serious damage. As Sramana pointed out pricing is a hugh issue.
Hopefully, they are still committed to making Bangalore there 2nd HQ termed Cisco East.
It is not how many employees are cut but where.
Since one US worker is a cost multiple of workers in India or even Europe the cuts are likely to be in the US. A similar process has been started at IBM, Cisco looks to be doing something similar. Ditch the US workforce because they are not relevant.
I would like to welcome America to the rest of world, nice of you to notice that we are getting along fine without you.
I doubt the company will ditch the US workforce simply by looking at the cost of workers.
They will ditch people from the business units that are contributing little or no profit, whether
they are in India or US. They should do one big layoff instead of a few for the sake of morale.
Furthermore, the cut needs to be done across the board which includes middle managers.
“….. a net increase of approximately 1,000 from Q1 FY’08″…
if we look closely, the net increase are from India/China. as far as I know, CSCO laid off about 1,200 in R&D alone in Q208…
Cisco is a great company. But bogged down in process.
Everyone I know there is pretty much stuck in their position/roles for the past 10 years. Maybe their salaries might have gone up a bit.
They have definitely been sitting there collecting options. But there are No promotions.
Some fat should be let go 10% is good. 15% is great. This is win-win. People inside the company might get promotions and people who are laid off might have good ideas and experience to start innovative new companies.