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Cisco firing people
Cisco Systems Inc. is the largest company specialized in producing networking equipment and it’s apparently planning to reduce the number of jobs by 10,000. That means 14 percent of its employees will be laid off.
The measure is meant to improve the company’s profit growth and is scheduled to be applied in the next month. By the end of August 7,000 jobs will no longer exist. For the other 3,000 employees that will be laid off, Cisco is offering an early-retirement package. These are workers that have accepted buyouts.
To compensate for loosing ground in its business related to lower-priced and simpler products in favor of its competitors Hewlett Packard Co. and Juniper Networks Inc., Cisco has decided to cut jobs and give up some of its businesses which are no longer profitable. For example, even if last year the sale of routers and switches has brought to Cisco more than 50% of its revenue, this year the sales continue to decline.
The measure is expected to help Cisco save $1 billion in the 2012 fiscal year. At least that’s what the officials said in May. On the other hand, the early retirement packages I mentioned before are going to cost Cisco more or less than $1.1 billion that will have to be spent in the fourth quarter of the fiscal year. The early retirement package includes the pay for one year and also medical benefits. Some sources say that this package was offered to 5,800 employees.
Today, Cisco managed to gain 7 cents in New York and have its shares valued at $15.50. If we don’t take into account today’s evolution, Cisco has managed to drop on the Nasdaq Stock Market 24% since the beginning of the year.
Regarding its router sales, on the global market, Cisco has lost 6.4 additional percentage points in favor of Juniper. But even so, Cisco’s revenues are expected to increase by $43 billion this year. They also hope to significantly increase their 2012 revenues by cutting jobs, because many experts consider that Cisco has too many employees.
Apparently, Cisco is dealing with the situation gracefully and I’m sure that there are many among us who love and trust their products and are interested in the company’s future.
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