Cisco to lay-off 6,500

Cisco, the networking equipment vendor, has announced that it is to lay-off 6,500 workers worldwide, in a bid to revive its fortunes. In a filing with the US Securities and Exchange Commission, the company said that the move would reduce its regular full-time staff by nine per cent and that approximately 2,100 of the employees would be leaving through a voluntary early retirement program. The remaining job losses will be announced in the first week of August.

Cisco estimated that the severance payments and other related early-termination charges would cost it $1.3bn, but it said it hopes to save $1bn annually following restructuring.

Cisco Will Reduce Its Workforce By 6,500 As It Looks To Cut Costs

The job losses come after months of concern from shareholders that the company’s foray into consumer products and social media was causing it to lose focus on its IP and core networking portfolio and its poor financial results in April caused it to drop heavily in value on the stock market.

The San Jose-based company announced a corporate restructuring program in May and immediately closed its loss making Flip video device division and closed down its Eos Social Platform.

“To fully realize Cisco’s potential we know we must make some very important operational changes and clearly define our network- centric strategy,” the company said in a statement. “We are moving quickly to focus our product portfolio, simplifying our operations (including significant cost reductions), and allocate our capital in the most productive way possible. An integral component of the plan is our goal to take out $1 billion in costs from our fiscal 2012 expense run rate, and part of that is obviously tied to the size of our workforce”.

Cisco established a beachhead in the telecoms space in October 2009 with the purchase for $2.9bn of Starent Networks, which provides multimedia intelligence platforms for services running between the radio and packet core network on 2.5G, 3G and 4G networks.