Cisco cutting 4,000 jobs, CEO sees slow progress
Network equipment maker Cisco Systems Inc is cutting 4,000 jobs, or 5 percent of its workforce, as it makes a fresh attempt to reduce costs and refocus on growth areas in the face of uncertain demand for its networking equipment.
Shares of the world's biggest network equipment maker fell more than 9 percent after hours, their biggest drop in more than a year if reflected on Nasdaq on Thursday.
A lukewarm revenue forecast dashed expectations that Cisco could overcome muted demand for tech infrastructure. Its shares had been up more than 50 percent in the past 12 months.
Cisco has been whittling away at its workforce and selling off consumer businesses - such as its line of "Flip" cameras and home networking - in a turnaround begun in 2010, when it started losing ground to nimbler rivals like Juniper Networks and Palo Alto Network.
The company that once specialized in providing the backbone of the Internet now sees software and equipment for datacenters and corporate cloud networking as its keys to growth. But Wednesday's results suggest the pace of expansion has been slower than anticipated, analysts said.
"The environment in terms of our business is improving slightly but nowhere near the pace that we want," said Chief Executive John Chambers on a conference call following quarterly earnings. "We have to very quickly reallocate the resources."
Cisco said last month it plans to buy cybersecurity company Sourcefire Inc for $2.7 billion. The company has made it a priority to improve security across its hardware, software and cloud products.
Chambers also said the current business environment was underpforming his expectations. Despite strength in the United States, weakness in Asia and mixed results from Europe continued to dog its business.
The Cisco CEO's take on the global corporate technology environment is closely watched by investors, as Cisco is regarded a strong indicator of the general health of the technology industry because of its broad customer base.
Shares of Microsoft Corp, Oracle Corp, IBM and Hewlett-Packard Co all fell slightly after hours.