World’s largest manufacturer of network hardware Cisco Systems announced plans to cut several thousand jobs worldwide. Reductions are carried out within the framework of the reorientation of the company’s main activities and the rejection of non-core or unprofitable areas.
Previously, Cisco CEO John Chambers has come under fierce criticism from shareholders who accused him of being a company that tries to simultaneously play on a completely different markets and can not do this successfully, causing increased costs and falling profits. Responding to this criticism, CEO, announced plans to “radically simplify” the structure of Cisco.
In management plans include reducing annual costs by about $ 1 billion or 6% of total cash flow, Cisco year. Now Cisco is not saying exactly how many employees will be cut, saying only that in the first place to retire will be sent to employees who have reached retirement age. Inside the company, sources said that Cisco plans to lay off 4 to 5 thousand people out of a total staff of 73,000 people.
Previously, the company has already announced freezing of the program admission of new members, as well as optimization of the number, which resulted from Cisco were fired about 2000 people. After that, the admission of new members was again renewed.
Analysts say that the excess number of staff – this is just one of the company’s problems. Other – stiff competition in the network market, resulting in equipment prices falling and companies are forced to operate with lower profitability. For example, profits from sales of Cisco routers in the past year decreased by 9%, whereas previously CEO of the company announced a plan under which annual revenues will grow by 12-17% each year.
Cisco Systems fired from 4 to 5 thousand
On the eve of Chambers acknowledged that this forecast does not seem possible to achieve under existing conditions.”
Today, the network equipment maker issued a forecast that annual profits will be closer to the lower limit of the previously promulgated by the forecast. With regard to the quarterly results, in the third quarter ended April 30, the company reduced its net profit by 18% to 1.8 billion dollars, or 33 cents per share. A year earlier, net income amounted to 2.2 billion dollars, or 37 cents per share. Operating profit was 42 cents per share.
Quarterly sales rose 5% to 10.9 billion dollars, which corresponds to market expectations.
In the current quarter, Cisco expects a net profit of 37-39 cents per share. Revenue is projected at the previous year, plus or minus 2%.
In a statement producer also noted that the program early departure of workers for retirement will cost an additional 500-1100 million.
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