SAN FRANCISCO—Networking gear giant Cisco Systems Inc. said Tuesday (July 18) it would cut about 6,500 jobs across its global workforce as part of a plan to reduce operating expenses by about $1 billion per year.
The 6,500 job cuts—about 9 percent of Cisco's regular full-time workforce—include about 2,100 employees who elected to participate in a voluntary early retirement program, Cisco (San Jose, Calif.) said. Roughly 15 percent of the layoffs will be vice presidents and higher ranking executives, Cisco said.
All affected employees will receive severance pay and outplacement assistance Cisco said. Cisco said it expects to recognize total pre-tax restructuring charges to its financial results of no more than $1.3 billion over several quarters for severance and other one-time termination benefits.
Also Monday, Cisco said Foxconn International Holdings Ltd. agreed to buy Cisco's set-top box manufacturing facility in Juarez, Mexico. Financial terms of the deal were not disclosed. But Cisco said roughly 5,000 people employed at the site would become Foxconn employees in the first quarter of 2012. The 5,000 employees transferred to Foxconn as part of the agreement were not including in the 6,500 job cut announced Monday, Cisco said.
Cisco assumed ownership of the Juarez plant when it bought Scientific Atlanta in 2006, the company said. The facility manufactures video and telecommunications equipment for the service provider market.
"After working closely with Foxconn for many years, we know they are a strong strategic fit with Cisco's long-term goals and are committed to a successful future in North America, said Gary Moore, Cisco executive vice president and chief operating officer, in a statement. "We remain fully committed to our service provider customers and partners, and will continue investing in existing and new video platforms, including set-top-boxes, as part of our Videoscape vision."
Analysts have been expecting Cisco to cut jobs since the company turned in disappointing quarterly numbers in May. According to theWall Street Journal, analysts had pegged the number of layoffs at between 5,000 and 10,000.
When a company is driven by a few, protecting high salaries as their first priority, this outcome is always predictable.
IMO, broad salary gaps in any organization, will eventually lead to a tribal mentality amongst a select few.
@MHK_#1: since most of the VP's get paid more like $200,000+ (including benefits) and the news says 75% will be those, the numbers don't quite add up! There has to be a significant number of lower level employees in the $110,000 to $120,000 range (including benefits ~$153,000!).
With a little bit of math, 1B/6500 = ~$153,000. Therefore, Cisco will save this amount for this year. That is a dollar money Cisco will spend to have 1 employee about year, although $$$ can be varied title, location and hidden cost. I am curious how 6500 will be spread over US and world locations. In here, Cisco people may not be paid to get his salary. Most lay off people may be at Bay area or Southern CA where a salary amount is large. Does any one know or do they say anything like that?
I think Cisco is thinking about long-term; and that is understandable. But for employees to receive a voluntary early retirement package, and possess Cisco expereince, that is not a bad deal overall. But I understand.
The "15% layoffs will be vice presidents or above" comment is very dubious. If Cisco really has more than 975 VPs the company is way too top heavy and the CEO who let this happen deserves to be fired, not the individual workers.
I suppose that network switches and routers are more and more becoming a commodity product, and that's what often happens to companies that produce commodity products. It seems they're doing a booming business one day, and suddenly it goes flat.
Don't have any inside info, such as Superdude, so I have no idea whether clueless top management is a problem. (It often is.) It seems to me that with IPv6 now coming on stronger, Internet TV, and wireless broadband, there should be quite a few innovative products needed in Cisco's sphere, no? And innovative system solutions too?
One thing I do note is that Cisco-branded telephones have suddenly become THE ubiquitous telephone standard. Even in movies and TV shows. So, that's one innovative market segment they exploited nicely, I think?
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