SAN FRANCISCO (BLOOMBERG, REUTERS) - Cisco Systems, the largest maker of networking equipment, will cut as many as 14,000 employees worldwide, or 20 per cent of its workforce, CRN reported, citing people close to the company.
Cisco will announce the cuts in the next few weeks, technology news website CRN said on Tuesday (Aug 16), without naming its sources. Andrea Duffy, a spokeswoman for Cisco, declined to comment on the report.
Chief executive officer Chuck Robbins, who took over in July 2015, has been working to boost growth by shifting Cisco's offerings toward software-based networking, security and management products, which customers increasingly prefer because they're less expensive and more versatile.
Cisco will report fiscal fourth-quarter earnings on Wednesday after the close of share trading in New York. Analysts project a 2 per cent decline in sales to US$12.6 billion.
Cisco had about 73,100 employees as of April, according to data compiled by Bloomberg. The company last announced a large round of firings in August 2014, when it eliminated 6,000 positions.
The new emphasis on software is requiring staff with a different set of skills, CRN reported. Many early retirement plans have already been offered to employees, the website reported.
Cisco has shown its appetite for software with recent acquisitions, such as Jasper Technologies, which makes programs that let companies connect all manner of electronic devices.
Results released in May showed that Mr Robbins is making headway in rejiggering Cisco's businesses. The company projected sales growth of as much as 3 per cent in the period that ended in July, compared with analysts' projections for a revenue decline.
Even so, Mr Robbins said the company still has a long way to go and that earnings are not where they should be. Cisco's biggest division, switching, had third-quarter sales of US$3.45 billion, a decline of 3 per cent from a year earlier. Its second-largest division, routing, suffered a 5 per cent drop in sales to US$1.89 billion, the company said. Newer units including security, service-provider video and collaboration all posted sales increases of more than 10 per cent.
Apart from Cisco, two other big software companies, Microsoft and HP, have also announced job cuts this year. Microsoft said in July that it would lay off about 2,850 jobs over the next 12 months, taking its total planned job cuts to up to 4,700, or about 4 per cent of its workforce. HP Inc said in February it would cut about 3,000 jobs by the end of fiscal 2016.