US : Cisco Says It Will Cut Thousands of Jobs Amid Revamp
Wed Aug 17 2016
Rachel Long (508 articles)

US : Cisco Says It Will Cut Thousands of Jobs Amid Revamp

Networking giant Cisco said Wednesday that it would cut up to 5,500 jobs, or around 7% of its global workforce as it tries to adapt to a changing technology landscape.

Although a huge number, the total is fewer than the 14,000 jobs, or 20% of its workforce, that trade publication CRN said on Tuesday that would be eliminated.

Money saved on the cuts will be plowed-back into priority businesses such as security, Internet of things, collaboration, next-generation data center gear and cloud, Cisco chief executive Chuck Robbins said on the earnings call. It’s unclear from that list what, exactly, are low-priority areas, however. Presumably they include Cisco’s older line routers and switches.

That there would be job cuts at a legacy IT provider is almost a forgone conclusion as these companies, many of which made the bulk of their money on pricey, proprietary hardware and software, must adapt to a world in which more companies send more of their computing jobs to a public cloud provider like Amazon @amzn amzn Web Services.

That means fewer data center customers for companies like Hewlett-Packard Enterprise hpe , IBM ibm , Cisco, EMC emc , and others.

Adding insult to injury, big public cloud providers, which rent out their computing capacity to customers, don’t tend to buy name-brand hardware from companies like Cisco or IBM.

The job cuts will start this quarter, the company said.

For the quarter, Cisco reported earnings of $ 2.8 billion, or 56 cents a share, on sales of $ 12.64 billion. Non-GAAP earnings were $ 3.2 billion or 63 cents per share, beating analyst expectations of 60 cents per share.

Cisco shares were off about 1% to $ 30.40 in after hours trading.

Rachel Long

Rachel Long

Rachel Long is our Desk Correspondent covering Stock Markets across the globe. She is based in New York


Rules of Discussion on Live Index

1. This forum is for discussion of financial markets. Please respect others view even if they are contrary to you.
2. Member's comments should lead to value addition in forum discussion.
3. If anyone is found making repetitive Explicit/Abusive/Racial comments, his account shall be banned and old posts will be deleted.