Cisco to cut 6,500 jobs, sell plant
7/18/2011 6:48 PM EDT
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 the Wall Street Journal, analysts had pegged the number of layoffs at between 5,000 and 10,000.