Cisco plans to lay off 4,000 workers beginning this quarter, the networking giant announced Wednesday. The cuts amount to 5 percent of its workforce.
The layoffs come as Cisco anticipates a rocky economic environment and seeks to ensure its expenses remain in line with its revenues, said John Chambers, Cisco CEO, during the company’s fiscal fourth quarter earnings call.
“The economy is more mixed and unpredictable than I have ever seen it,” Chambers said.
He noted that a large portion of the layoffs will begin this quarter, with the remainder continuing through the rest of the fiscal year.
Maintaining profit levels, as well as a reallocation of resources to other areas such as security, mobility and the cloud, where the company believes there are greater growth prospects, were driving the decision for the layoffs, Chambers said.
Additionally, the company will have more agility with smaller teams, which, in turn, will help it with its first-mover advantage efforts, Chambers noted.
Chop Here, Prune There
Cisco’s 5 percent is its latest downsizing effort over the last 13 months. Last summer, the company said it would eliminate 1,300 positions, or 2 percent of its workforce, as part of an ongoing restructuring. And in March this year, Cisco axed 500 employees as part of an occasional rejiggering of resources, according to AllThingsD.
For Cisco, the cuts are not a result of the company bleeding tons of red ink. In fact, when it unveiled its fourth quarter results Wednesday, Chambers noted the company posted a record quarter for revenues and its bottom line was profitable.
Cisco posted fourth quarter revenue of $12.4 billion, up 6 percent from a year ago. And its net profit reached $2.27 billion for the quarter, an increase from $1.92 billion a year earlier.
However, Cisco’s forecast for the current quarter was less than what Wall Street had hoped for, and despite the cost-cutting moves it announced, investors punished the stock in after-hours trading.
Cisco’s shares fell 9.62 percent to $23.84 a share in after-hours trading, compared with its close during the regular trading session of $26.38 a share.