Optical/IP Networks

Cisco's Early Retirements Begin

Today is the last day at work for a still-undisclosed number of Cisco Systems Inc. (Nasdaq: CSCO) employees who have opted to take the company's early retirement package, industry sources tell Light Reading Cable.

In May, speculation spread that Cisco could cut as many as 4,000 jobs, or about 6 percent of its full-time employees. It's still unclear how many Cisco employees will be part of this round, but one source says the losses do extend to the old Scientific Atlanta unit and could be substantial. (See How Deep Will Cisco Cut? )

CRN reported Friday that Cisco employees had until June 24 to decide to take the package. Sources say eligible employees were those 50 and older whose age plus years of service totaled at least 60. They're in a position to get one year in severance pay, with Cisco also providing two years of medical coverage, a source said.

Executives ranked vice president and higher were ineligible, as were Cisco Distinguished Engineers and Fellows, CRN reported.

Cisco wouldn't confirm any details of the package. A spokeswoman said more information about layoffs and the company's plan to shed expenses will be discussed during the company's fourth-quarter earnings call, set for Aug. 10.

The voluntary retirement packages tie into Cisco's plan to chop $1 billion in expenses this fiscal year, which ends July 31, a plan that has already seen the demise of the Flip video camera. During Cisco's third-quarter earnings call in May, Chief Operating Officer Gary Moore noted that the company intended to communicate its layoff plans "by the end of summer." (See Cisco Preps for Layoffs, Cisco Flips on Consumer Business and Cisco Signals Major Restructuring.)

With the early-retirement window closed, any sort of future alternative will probably be a lot less enticing. Multiple sources say that Cisco isn't expected to extend a similar offer if it's forced to make deeper, wider cuts later this year.

But recent history suggests that most of the Cisco employees who are eligible for the program likely pulled the trigger. Cisco extended a similar early retirement offer about two years ago and, according to a source familiar with it, a large majority of the employees who were eligible opted for it.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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DCITDave 12/5/2012 | 4:59:49 PM
re: Cisco's Early Retirements Begin

Early retirement used to sound like such a great thing. "I'm going to retire, but I have SO MUCH saved that now I can do it EARLY."

Now it just means you've been sacked. I wonder how much an early retirement at Cisco gets you? A month's pay? Will that last through your twilight years? 

So odd that companies have managed to spin layoffs into something that sounds so great.


Cisco_Engineer 12/5/2012 | 4:59:48 PM
re: Cisco's Early Retirements Begin

It was one year's salary plus target bonus, lump sum of 2 year's medical/dental/vision costs (grossed up to avoid income taxes) and 2 x 4.5% of your salary (Cisco's contribution to a 401k plan but not grossed up).

CapitalC 12/5/2012 | 4:59:48 PM
re: Cisco's Early Retirements Begin


"Early Retirement" in this case is not a euphemism for layoffs.

The program is entirely voluntary. Everyone over 50 with a few years of service was eligible. Agree to leave your job and you get a severance package. Several months of salary (word on the street is 24 months) and full benefits for a while too.

It's not clear whether the deal prevents you from working somewhere else. Maybe you forfeit the payout if you take another job. Maybe not. Many of those who take the package are still highly employable and will be working again as soon as possible.

The issue with these voluntary programs is generally that the most capable employees take them, knowing they can just get another job. It's the worst sort of attrition - why encourage it? Generally it happens when companies don't have the guts or savvy to differentiate their talent (an FTE is an FTE is an FTE).

Of course Cisco has said there will be substantial layoffs "by the end of the summer". Those are involuntary. Precedent suggests the package there will be several months of salary too, but probably less than the voluntary package. So maybe some folks saw the writing on the wall and took the voluntary package rather than get fired.

Still, it's a bad sign if Cisco management desperately wants to shed cost, and doesn't really care about the talent, wisdom, and domain expertise they are losing.  Just hire some freshers in India - they're cheap, right?

Jeff Baumgartner 12/5/2012 | 4:59:48 PM
re: Cisco's Early Retirements Begin

Yeah, I know quite a few folks who took early retirement packages, took a breather, and are now very much un-retired. JB

allen007 12/5/2012 | 4:59:47 PM
re: Cisco's Early Retirements Begin

Hi Southernlight,

I appreciate your comments .  I'm not bashing Cisco . I'm merely presenting the facts and if you speak with these people expect confirmation # Just saying  

southernlight 12/5/2012 | 4:59:47 PM
re: Cisco's Early Retirements Begin Allen, Wow. You may want to focus on improving your spelling, grammar, and general coherence of thought before criticizing Cisco management. Just sayin'.
allen007 12/5/2012 | 4:59:47 PM
re: Cisco's Early Retirements Begin


Cisco requires management change and revamped methodology that's synonymous with honesty.  They can't conduct this type of business anymore. If the CEO steps downs , change their methods ...everything should fall into place.  Right now Cisco has to many layers of management who screwed good talent not to mention conducting business like cowboys without purpose … its not good for the market,  economy and long term success.

Anytime you have management who negatively (invisible arm) impacts former engineer's livelihood  and think its ok. Cisco tried to destroy the following people :  

Michael Lynn

Rodney Humphrey

Wayne Laws

Ken Galuarde

Glenn Mowat

Steve Simmons

David Van Dyke

Mark Tomek



… the list goes on.  Having people followed , intimidating , playing with emails, phones , recruiters , friends , public institutions ... isn't the American way !  I'm still a Cisco fan … the first routing platforms (AGS)... but not a fan of their business ethics .

marlin_brando 12/5/2012 | 4:59:47 PM
re: Cisco's Early Retirements Begin

What's up in Cisco India ?. Senior people are watching the news with extra care.

Hope nothing impacts


allen007 12/5/2012 | 4:59:46 PM
re: Cisco's Early Retirements Begin



what part the informal response requires change ? Would you like to see APA ( college term paper style)  ?

jewelry45 12/5/2012 | 4:59:44 PM
re: Cisco's Early Retirements Begin

The Early Retirment Package from Cisco was very GENEROUS to say the least.  What I have found out though is that not a large population of the folks in their 60's took the package (unless they were pretty sure that they would be laid off) as they realized that they were not very "employable" especially at what they presently earned.  What I personally saw is that a LARGE number of those Cisco employees in their early to mids 50's very happily took the package.  They originally received the offer in April and immediately started interviewing for new jobs.  They did not have to make the decision to take the package for 2 months which gave them time to see if there were other opportuities for them.  Many of them found new employment, therefore, many in their 50's did take the package and are moving on to new jobs.  What a wonderful bonus for those who put in many, many years at Cisco and who probably saw most of their stock options go under water and rarely got raises or promotions!...

Now, Cisco has to decide how many to lay off which makes life working at Cisco not very happy right now. 

Main question is with so many very talented people leaving (many to competitors), how will this affect Cisco going forward?

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