Light Reading

Report: Cisco Cuts Could Hit 10,000

Ray Le Maistre
7/12/2011
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It's set to be a long month for Cisco Systems Inc. (Nasdaq: CSCO) employees as speculation mounts about the severity of the company's impending job cuts, with Bloomberg reporting early Tuesday that up to 10,000 jobs -- about 14 percent of the company's workforce -- may leave the company as a result of enforced layoffs and voluntary early retirement.

The giant vendor will reveal the extent of its headcount reduction program as part of its Aug. 10 earnings announcement, but until then it's likely that various numbers will hit the news wires.

And the layoff projections are updating quickly -- on Monday the talk was of 5,000 job cuts, while in May the talk was of 4,000 departures. Some Cisco staff who opted for early retirement are believed to have already left the company. (See Cisco May Cut 5,000 Jobs and Cisco's Early Retirements Begin.)

Cisco announced in May, as part of its fiscal third-quarter earnings announcement, that its headcount would be reduced during 2011, noting that staff would be informed of the details by the end of the summer. (See Cisco Preps for Layoffs.)

That announcement followed an internal memo from CEO John Chambers announcing a major upheaval in the company that was designed to combat operational problems, a move that was followed swiftly by the closure of the company's Flip video camera business. (See Cisco Signals Major Restructuring and Cisco Flips on Consumer Business.)

Other recent Cisco developments include:

— Ray Le Maistre, International Managing Editor, Light Reading

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Rush21120
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Rush21120,
User Rank: Light Sabre
12/5/2012 | 4:59:36 PM
re: Report: Cisco Cuts Could Hit 10,000


Is it already a forgone conclusion most of these cuts will be US based?

inauniversefarfaraway
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inauniversefarfaraway,
User Rank: Light Beer
12/5/2012 | 4:59:35 PM
re: Report: Cisco Cuts Could Hit 10,000


If Cisco is to continue it's downward spiral, then cuts would have to be in the US. Fire all the competent folks, they are usually the most unhappy. What will be left will be a happier company!


Pretty sad, instead of becoming the dog of the DOW, maybe JC should have gotten a seeing eye dog... Perhaps his dislexia has gotten the better of him, he thinks the company is actually improving when you read the chart sideways.


If the Nortel failure was any indication, no doubt they will trim the muscle and keep the fat. You can't sprain the fat, can't work it too hard.


The prevailing wisdom is that Cisco has become just like Nortel... Isn't that funny?


Remember the lesson from the Nortel days, make sure to jump on the first package, they only get worse after... ;-)

olegzz
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olegzz,
User Rank: Light Beer
12/5/2012 | 4:59:31 PM
re: Report: Cisco Cuts Could Hit 10,000


The main problem inside Cisco is that there are too many managers (I would even say too-o-o-o-o many). In vertical, there could be up to seven layers of managers (who doesn't make money but definitely want to have personal assistant) for one engineer.


Managers usually don't care about business, manager cares how to become "senior manager", senior manager cares how to become director, director cares how to become vice-president and so on. There is nothing about technology leadership here.


Last 5-7 years a lot of casual people came to Cisco as managers. They could sphere the cheeks but current Cisco state clearly shows that this is not enough.


So it could be easily cut up to 1/7 of total number w/o business affect. Of course managers.


Because engineers are the treasure of company.

inauniversefarfaraway
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inauniversefarfaraway,
User Rank: Light Beer
12/5/2012 | 4:59:29 PM
re: Report: Cisco Cuts Could Hit 10,000


Olegzz,


Courageous engineer, you have my best wishes for success!


Sadly, Cisco has eliminated the engineer in favor of the manager from its inception. The two Cisco founders were rejected from their own creation and this has not stopped. Cisco is a religious believer that organization and management are the keys to success, not brillant engineering. They believe they can manage in spite of engineering.


They will most likely follow in the steps of Nortel, a company that took out full page advertisements to praise their employees publicly, but savaged them privately. The proof of this is now history, we only need mention the pension plan.


Cisco will become yet another victim of human nature. We are social animals and as such will rely on our ability to socialize over and above our ability to innovate. The cliques within each division of the company have cemented the confidence of their superiors and this ensures they will remain and the engineers will go. These relationships are now more important than the company, the business and most especially the engineer.


A very similar phenomenon can be observed in Washington. Cliques (parties) rules over the interests of the organization (or country). The only advantage in Washington is that "the people" get to clean house every few years.


Make no mistake, Cisco is doomed... The reason is that the only way forward for companies this big is to become conglomerates. If they fail at this, then they are a one trick pony. Their culture can only do one thing. This is usually fatal because it only takes a few small changes to upset the applecart. Time will tell.

rakes
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rakes,
User Rank: Light Beer
12/5/2012 | 4:59:17 PM
re: Report: Cisco Cuts Could Hit 10,000


From knowing past colleagues at Nortel, many of them ended up at Cisco over the last several years. In my opinion, Cisco went from a company that had high standards to one that would hire just about anyone. Somewhere along the way, they seem to have lost control of their vetting process. The same applies at Juniper but to a lesser degree.

inauniversefarfaraway
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inauniversefarfaraway,
User Rank: Light Beer
12/5/2012 | 4:59:09 PM
re: Report: Cisco Cuts Could Hit 10,000


Hello rakes,


Looking at these same events from a slightly different viewpoint. You will recall that the response from Nortel at the exodus of qualified staff was precisely to hire just about everybody and their relatives. This immediately preceeded the great fall.


Could it be that Cisco is exhibiting the same behavior in hiring indiscriminantly?


The back room boys thought that moving CSCO to the DOW was the only way to pump more money into the pig, yet institutions were sure to steer clear of the zombie.


Now they plan to grow by shrinking, good luck with that.


The cuts are probably intended to pay for the big acquisitions ahead... Bet you one of the "big" acquisitions is Cortina, an IPO failure by any standard, but required to pay off the oinker VCs and their drinking buddies.

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