Cisco System plans layoff of 4,000

The networking giant Cisco Systems(CSCO) on Wednesday announced it will cut 4,000 employees - about 5 percent of its global workforce - which comes on top of nearly 8,000 previous job cuts in the past two years, San Jose Mercury News reported.

Despite being Silicon Valley's fourth-biggest corporation in revenue, Cisco has run into trouble due to intense competition in some of its markets and because the sluggish global economy prompted many companies to scale back

While acknowledging that the San Jose company's progress continues to be hindered by the "challenging and inconsistent" global economy, Cisco CEO John Chambers said the main reason for the layoffs was to whittle down the layers of people in Cisco's various divisions, some of which have been slow to respond to technological changes.


"We just have too much in the middle of the organization," he said. "We've got to speed time to market. Small teams move much faster."


Cisco identified cybersecurity, data centers, video and Internet or so-called cloud-based products as ripe for expansion. The company said some of the laid-off employees would be rehired for its high priority businesses, but declined to say how many.


"I'm very pleased with how we are operating," Chambers said in a conference call with analysts to announce its quarterly earnings, where it reported record sales and an 18 percent jump in profit from a year ago, although its shares fell nearly 10 percent after the earnings report. "I'm very comfortable with our momentum. It's just not fast enough."


Baird Equity Research analyst Jayson Noland said Cisco'sworkforce reduction "makes sense generally" because it's "very important for large companies to innovate quickly, given the landmark changes across IT, and I can appreciate that layer upon layer of management tends to get in the way." But he said it's hard to evaluate Cisco's plans since Chambers was vague on some details.
The company declined to say where the layoffs would occur and how many of them would be in the Bay Area, where Cisco employs 17,496, according to spokesman Marc Musgrove. The company has a worldwide workforce of 75,000.