Cisco to cut 6,500 jobs, sell plant

7/18/2011 11:03 PM EDT

Same story repeats, is their no reformation in how companies manage their management?
The company whose core business is networking becomes ambitious and goes into home electronics/gadgets and couple of years later they get fried. No problems they have the age old, so calle solution, they can fall back on- Lay of the workers and keep your bonusses.


Some idiot in a suit makes a gamble and thousands pay the price.

7/19/2011 12:26 AM EDT

Due to Linux, Embedded Linux and Linux Networking features, most of the open source technologies are now competing with Cisco from top to bottom level applications, due to this reason sell of cisco products has gone extremely down, in this case if cisco can revise their price structures and redefine their structure they can survive better, otherwise there will be job cuts like this.

7/19/2011 2:12 AM EDT

It is ok to take a gamble and some of it might not work (Chamber's method) What is not ok is to ignore your core product along the way.

It is easy to say this was coming, but you had to be in the inside (low level worker) to see it really coming. This is happening in not just Cisco (Most big engineering companies are in a similar boat), but Cisco is one of the worst examples:
- Endless discussions and meetings about what the next product should do (high level people with no real knowledge of how to implement a product)
- Expect an understaffed team to pull a miracle in a short time
- Mid way through a project, the high level people decide to redefine half of the product.
- The implementing team is pressured to deliver by cutting corners

The result is a product that is late, people that are burnt out, products that need to be reworked many times, and the good people that have left.


What is more unique to Cisco in the above is that hardware has been seen as a necessary evil (Cisco is more of a systems and software company) The hardware people are really under pressure to deliver with less resources. This is where the accounting says your hardware R&D costs are up and for short term you should reduce your costs to make the balance sheet look good. Never mind that Cisco box takes 4-5 years to make.

For a while Cisco has tried to reduce their ASIC starts and buy generic chips. This is ok to reduce costs but is makes your product less unique (lower level competition now really eats your lunch since they can buy the same chips)

7/19/2011 2:14 AM EDT

To top it off, the model above really doesn't work at all for a consumer product. It will take a year to define the spec in Cisco. For a consumer product you have that much time to deliver a manufacture ready system or you miss a full cycle (Christmas/back to school)and your product is irrelevant.

I am sure there are many other smaller factors (old timers that don't contribute, market saturation, short term bean counting, etc...) But end story is the same. You need to innovate or someone else will.

I really thought that Cisco was successful before because they bought many smaller companies that could innovate. The rate at what they have bought good small companies has dropped significantly in the last 6 years. This where they have lost their source of real innovation.

7/19/2011 3:15 AM EDT

AS many many steps are automated in producrion of the routers and switches naturally the need for human assistance is reducing in giant companies. this job cut reflects this advancing robotic world

7/19/2011 3:31 AM EDT

Same old tactics. The 1st person that should go is the CEO. That guy has no idea.

7/19/2011 10:17 AM EDT

It is easy to see that there is a cyclical nature to management in big companies. A new manager comes in and says "our numbers are down, we need to diversify". A few years later his successor comes in and says "our numbers are down, we need to concentrate on our core business". This can go on for ever, with a cycle of lay-offs and hirings caused by it.
As around 90% of all new ventures and startups fail, why should we expect a new venture within a big company to fare much better? Most new products are a gamble unless you are just copying and existing best-seller, in which case the gamble is that someone else will not be able to undercut your price.

If you do diversify, you need to have expert understanding of where you are going to. If you concentrate on your core business, you need expert understanding of your existing market. No amount of management consultants make up for understanding what people want to buy.

I favour organic diversification, that is reaching out from your core competencies to areas where they can be newly applied. If that form of diversification did not work, we would all still be breathing with gills!

7/19/2011 10:29 AM EDT

With most mobile operators moving their core to packet technologies, Cisco should really be doing more to get their products into this sector.

From my experience, this telecoms industry is still largely dominated by Tellabs, Alcatel-Lucent and Huawei.

7/19/2011 8:26 PM EDT

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?

7/20/2011 10:42 PM EDT

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.

7/21/2011 6:42 PM EDT

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.

7/22/2011 11:42 PM EDT

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?

7/25/2011 5:49 PM EDT

@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!).

MP Divakar