Cisco to cut 4,000 employees, 5% of work force
- Cromwell Schubarth
- Senior Technology Reporter- Silicon Valley Business Journal
- Email | Twitter | Google+
The company expects to take a pre-tax charge on the restructuring of $550 million.
In a conference call with analysts, CEO John Chambers said, "The environment in terms of our business is improving slightly but nowhere near the pace that we want."
"If we are going to lead in this industry, the one thing I have learned over the years is you have to be the first mover," he told analysts. "We have to very quickly reallocate the resources. A fair amount of that 4,000 people will be allocated to new growth opportunities."
Cisco did not return a call for comment.
The announcement came after the company posted earnings that beat Wall Street expectations and revenue that met projections.
The networking equipment giant reported net income of $2.3 billion for the fourth quarter, up 18 percent from the year prior. Earnings per share rose 17 percent to 42 cents.
Excluding a $172 million litigation expense from a patent settlement with TiVo, as well as other one-time charges, adjusted profit rose to 52 cents from 47 cents a share. Analysts polled by Yahoo Finance/Thomson Reuters predicted earnings of 51 cents a share.
The company posted $12.4 billion in revenue, up 6.2 percent year-over-year and in line with what analysts expected for revenue.
The San Jose-based company's stock was down nearly 10 percent in after hours trading.
This is the second round of cuts announced by Cisco this year, following 500 that were announced in March.
Cisco appears to be making job cuts a regular summer occurrence. The company cut 1,300 last July and 6,500 two summers ago.
Cromwell Schubarth is the Senior Technology Reporter at the Business Journal. His phone number is 408.299.1823.
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