Cisco plans job cuts, drops growth target

Cisco Systems plans to cut jobs as it focuses on his heart craft, such as routing and switching, the company said executives Wednesday after announcing a 11 percent decline in earnings in the third quarter.

The financial report was for the first time since President and CEO John Chambers presented a plan for the organization of Cisco to streamline and renew focus on core activities such as routing and switching. In addition to the disclosure of job cuts, Cisco said it was the subject of an ongoing goal to achieve revenue growth from year to year between 12 and 17 percent per quarter.

Cisco has developed for many companies and faces increasing competition in its home market, particularly in network switches, warned Chambers. At the same time, the public sector, a very important market for Cisco, has been reduced spending in all regions of the world, he said Wednesday.

Together with dismal news about the third quarter ended April 30, with a turnover of less than 5 percent on the estimates of the previous year, Cisco, the income for the current quarter would be flat or lower to 2 percent.

The job cuts are announced with a recent early retirement program, said Gary Moore, director of the company recently appointed Chief Operating Director of a program of U.S. $ 1000000000 is cut annual operating costs of expenses Cisco in the next year.

“To be clear, we reduced staff on a worldwide basis to anticipate that our two full-time and contract labor,” said Moore. Cisco will say no more after the Employees are informed of the end of the summer, set a rule in August or September. The job cuts will start their one-time cost of $ 500 million to $ 1 billion, Cisco said.

Cisco is in the midst of a study of 120 days of its portfolio of products for cost savings and not a company will not look like the Flip video camera, which was closed recently. The company said it is now clearly focused on routing, switching and services, collaboration, virtualization and cloud computing center, video and business process architectures.

“No excuses: we must act quickly, we are, and us,” said Chambers.

In addition to public distribution, including the company of the biggest weaknesses of the Consumer Business, which has already reorganized and switching business. In particular, the introduction of the line of Nexus 7000 switch has been to reduce profit margins in Cisco, Chambers said. It reveals that the gross margin is one of the switches 18 percentage points less than in previous Catalyst 6000 line, which was the backbone of the business of the company Ethernet business for many years. In addition, buyers generally have fewer new switches, because they have more ports can be accommodated, he said.

However, Cisco intends to maintain its market share leadership in the transition, said Chambers.

“We do not underestimate the transition to come,” said Chambers.

Cisco profits for the quarter fell to $ 0.33 per share of $ 0.37 per share last year. Sales rose only 4.8 percent from 10.4 billion to $ 10.9 billion.

Although the results of the vote, without the effects of time or beat analysts ‘forecasts’, the stock of the company was affected by the report. In after-hours trading Wednesday, Cisco shares were $ 0.57 to $ 17.21.