Cisco Slashes Jobs, Costs

Cisco Systems Inc. (Nasdaq: CSCO) today announced a broad cost-cutting plan that includes laying off at least ten percent of its workforce (see Cisco Announces Major Cuts).

The networking giant will eliminate 2,500 to 3,000 temporary and contract workers and cut 3,000 to 5,000 regular employees through "voluntary attrition, involuntary attrition," and consolidation.

Cisco expects to take a one-time charge of $300 million to $400 million by the end of the fourth quarter of fiscal 2001 to account for the workforce reduction.

Cisco CEO John Chambers said in a prepared statement that the actions were taken as a precaution, following signs of economic slowdown in the United States and other parts of the world.

The company also plans to cut costs in contract services, travel, and marketing expenses.

The company has roughly 44,000 regular employees. Although Cisco normally cuts about five percent of its workforce annually through a "performance management" program, more jobs are being cut this year than is usual, said a Cisco spokeswoman.

Analysts were not surprised by the action, give the recent earnings warnings and general slowdown in the U.S. economy.

"The cuts are not unexpected and should probably be seen as a fairly healthy culling of the weak and the lame from the herd," said Stephen Kamman, an analyst with CIBC World Markets. "The price of success for a big growth stock is that you'll someday grow big enough that you'll have to start doing what normal companies do."

-- R. Scott Raynovich, executive editor, Light Reading http://www.lightreading.com
csaszi 12/4/2012 | 8:44:56 PM
re: Cisco Slashes Jobs, Costs Just like one said 'all americans all foreigners (except native indians)'. I thought those times are over now. Good example on that 'US citizens are less biased', isn't it?
global talent 12/4/2012 | 8:45:36 PM
re: Cisco Slashes Jobs, Costs Hey, the irony about the whole issue is that very few understand that internet economy is not only about US..but fact is it is global.. no boundaries of land.. H1-B program which is a US program,keeps this economy to itself.. today, a software development can take place anywhere in the world and the market is global, so if not for US.. some other country would take advantage of the growth.

So.. Kissing big salaries good bye.. may be for today in US... never no.. it could be Russia or
for all that u know China or may be RSA.. that would give these salaries to the "global talent"

In some countries there have topics about Brain drain in the recent past. So if the party is really over then it will be reverse brain drain.
So my friend Think about it.... Nobody is a loser, unless he/she is talented.
Northpoint 12/4/2012 | 8:45:56 PM
re: Cisco Slashes Jobs, Costs What would be the going rate for options for a software engineer at Cisco with 5, 10, 15, 20 years of experience.

Same question for Nortel.

Same question for Extreme.
BigMikeJ 12/4/2012 | 8:45:56 PM
re: Cisco Slashes Jobs, Costs There is a big difference between available workers and talented workers.

I've been in the position of trying to hire engineers. I got many, many resumes, only a small fraction of which were from qualified candidates, and only a smaller fraction of those turned out to be ACTUALLY qualified on the day of the interview.

People talk about 20-somethings driving the internet. That may be true of the dot-com. no-business-plan mania, but when it comes to solid system engineering some of the best people I have hired have been 40 and 50-somethings who have been writing interrupt routines and devices drivers and dealing with protocols for 20 years.

These people also come with something else that is also common in foreign workers - a work ethic. People who want to EARN their money. They are also very well qualified academically.

In the companies I have worked for, foreign workers get paid the six-figure salaries. How many BGP and MPLS implementation experts are there, really? Try hiring one. If you get a US candidate, congratulations. Chances are you won't, because they already have high paying jobs... So you go overseas and, hey, there are literally hundreds of highly qualified, dedicated, professionals with an excellent work-ethic who are just chomping at the bit to work on next-generation products.

As far as layoffs: If I had to layoff 10 people, would I layoff my best 10, or my worst 10?

Think about that for a second before you try to kill the visa program.
shawn 12/4/2012 | 8:46:17 PM
re: Cisco Slashes Jobs, Costs this is the familiar xenophobia that sweeps across whenever the economy takes a downturn and foreigners are a convenient scapegoat. lets keep cooler heads and we will all get thru' to better times.

The only thing that seperates the U.S from Europe
in the tech field is the steady stream of talented foreign workers it attracts. americans are kidding themselves if they think they alone were responsible for longest expansion in U.S history..
darth_cm 12/4/2012 | 8:46:31 PM
re: Cisco Slashes Jobs, Costs They knew this was going to happen. These companies are still grabbing visa and trying to get them permanent status to dilute the labor force and lower overall salaries. There never was a real shortage outside a few computer related fields.

Plus, most people fail to realize that many foriegners are very ethnocentric and have tremmendous loyalty to their friends back home. Some foriegners are in positions of great power in many tech companies and are trying to bring more over. Some are great workers but many are weak compared to the frequently and incorrectly slammed American engineer. On the other hand, US citizens are less biased, although the Reverend Jessie, J. and the Rainbow coalition, would have you believe that is what white have done. So, there is a variety of effects here. Besides, the comapnies still have enough money to bribe the politicians, so H1Bs and immigration will continue.

The moral. Start your own company with a better product, for a better price that the consumer must have and use the cheap labor to your advantage. Plus dig into the experienced older but effective workforce that is overlooked by corporate america that only wants to hire new grads or imports.
optinuts 12/4/2012 | 8:46:38 PM
re: Cisco Slashes Jobs, Costs come on guys, quit the jingoism. cisco will put its business interests ahead of any other considerations. these corporations are global. lets lift ourselves a little higher for a change?
optical_funnybone 12/4/2012 | 8:46:44 PM
re: Cisco Slashes Jobs, Costs
sntwk 12/4/2012 | 8:46:46 PM
re: Cisco Slashes Jobs, Costs It doesn't matter. People should line up in cisco to receive the pink slips, with 6 months pay as severance package!. If the worker is talented he/she should actually take the lay-off package and find another job in 3 weeks.
flanker 12/4/2012 | 8:46:47 PM
re: Cisco Slashes Jobs, Costs
Since when is the Times accurate? Nobody reads the Times for business news.

You must be joking.
dingle_berry 12/4/2012 | 8:46:47 PM
re: Cisco Slashes Jobs, Costs That is an interesting question. I think that
the H1-Bs should be booted first and sent home
since they were only hired becuase "there were
no available US citizens" available to fill
the position.
The fact is the party is over. All of the high
growth rates that were predicted 1-5 years ago
are all bogus.
Now that the companies have the increase in H1-B,
along with the slowing growth, you can all kiss
your big salaries good by. Write your congressmen and tell them to pull a plug on this H1-B program!!
JS 12/4/2012 | 8:46:48 PM
re: Cisco Slashes Jobs, Costs I wanted to let you know that the figures listed here are way off. The # of employees effected and the amount of money it will cost the company is also off the mark by alot.

Anyone who wants the real story should read the times or go elsewhere for information. This story really says nothing, and what is does say is not accurate.
deadfish2 12/4/2012 | 8:46:48 PM
re: Cisco Slashes Jobs, Costs
I think all companies lie, specially in bad times! A few weeks ago it was only 2000, now it's 8000, a few weeks from now it's going to be 12000. Look at what Nortel, Motorola and others did, why would Cisco be any different?
deadfish2 12/4/2012 | 8:46:49 PM
re: Cisco Slashes Jobs, Costs
When it comes to laying off, does anyone know whether INS looks into who gets thrown out? I mean the H1 guy was hired because of shortage, now that the tide has turned, who gets thrown out first? The H1 guy or the US guy?
drone387 12/4/2012 | 8:46:51 PM
re: Cisco Slashes Jobs, Costs Layoffs don't look at individuals! The heck they don't. It's the time to settle political scores, unload the dead wood, etc. I've seen people on "safe" projects get bumped to make room for someone management values higher.
sntwk 12/4/2012 | 8:46:51 PM
re: Cisco Slashes Jobs, Costs What has H1 to do with Cisco lay offs. Why don't you take this topic somewhere else.

An employee is an employee whether permanent or H1. I am not aware if there is any targeting activity in lay-off. Usually they identify a product activity and judge purely on viability of that product/activity and close that group if not foudn viable. It is possible that some people in that group are very brilliant. But what I heard is that lay-offs don't look at individuals involved but the projects only.

Any case I suggest you don't discuss H1 related stuff here.

drone387 12/4/2012 | 8:46:51 PM
re: Cisco Slashes Jobs, Costs Isn't it classic that Cisco, et.al. finally got the H1-B limit raised right when the recession hits. They all institute hiring freezes and lay off 10% of their staffs. I can't wait to see all the politician who voted for it explaining that to the layed off techies. I wouldn't want to be a lobbyist trying to make the higher limits permanent now. From an academic perspective, it would be interesting to know if there is any bias for/against H1-Bs in the layoff process.

I wonder what happens to the Coyote Valley campus development now? What 20,000 new engineers?
captain kennedy 12/4/2012 | 8:46:52 PM
re: Cisco Slashes Jobs, Costs In the land of opportunity
It's plowin' time again! (Neil Young)
voyeur 12/4/2012 | 8:46:59 PM
re: Cisco Slashes Jobs, Costs Phil,

It's a shame you guys are so reactionary to your posters. Most of your article comes from the Cisco press release, and I am sorry, but when a company takes a one time charge of $300 to $400 million for the restructuring, it is a layoff.

No need to defend yourself on this one. On other articles, maaaaaybe.....

DCITDave 12/4/2012 | 8:46:59 PM
re: Cisco Slashes Jobs, Costs It's a shame that we respond to our readers? I beg to differ.

And I don't care if you call it a layoff, a restructuring, or (my favorite) an act of "involuntary attrition," the point was that the other poster wrongly felt that we'd overinflated the number of jobs in question. I responded to point out that we didn't.

You gotta problem with that?

DCITDave 12/4/2012 | 8:47:00 PM
re: Cisco Slashes Jobs, Costs The subject line -- Cisco Systems to eliminate as many as 8,000 temporary and regular positions in preparation for the slowdown -- doesn't state that Cisco is laying off 8,000 people.

It does say that jobs -- whether filled or not -- will be cut, though.

The piece is fine; no correction needed.

voyeur 12/4/2012 | 8:47:00 PM
re: Cisco Slashes Jobs, Costs Stop trying to pump up Cisco stock. Those figures came from Cisco. See below


Even if you take out the Temps (which some companies include in their reported headcount), 5,000 regular employees still amounts to 11% of their regular payroll. That's still slashing. Tell the 5,000 it's not slashing.

lightsource 12/4/2012 | 8:47:01 PM
re: Cisco Slashes Jobs, Costs i don't know what was the source for such a dramatic subject line, but lay off is nowhere close to 8000. in addition to normal 5% attrition which happens anyway in Cisco, additional 2500 temp workers may be laid off.

Well, idea of having contractors is have flexibility during such tough times !!
all-software-are-buggy 12/4/2012 | 8:47:03 PM
re: Cisco Slashes Jobs, Costs In the land of opportunties
one cisco does not create fatalities
In the land of freedom
abundance is choice for creation
It should be okay
to carry on the day...
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