April 19, 2024

Cisco Cutting 6,500 Workers to Lower Costs

Cisco Systems, the networking equipment maker, said it was cutting 6,500 employees, or about 9 percent of its work force, after it said in May that it planned to eliminate thousands of jobs to reduce costs.

Cisco, which has about 73,400 employees worldwide, said Monday that it was laying off 4,400 people. An additional 2,100 employees chose to leave as part of an early-retirement program.

The company said the cuts include the elimination of 15 percent of its employees at and above the level of vice president.

Cisco said the cuts would cost it $1.3 billion in severance and termination benefits. The company plans to take the charge over several quarters. It will take $750 million of that, including $500 million for the early-retirement program, during the current quarter.

Cisco will inform employees who have been terminated in the United States, Canada and some other countries during the first week of August.

In May, Cisco said it planned to eliminate thousands of jobs as part of a larger plan to lower annual expenses by $1 billion, or about 6 percent. Cisco did not say then how many jobs would be eliminated. The exact number has been the subject of many analyst and published reports since then. The numbers announced Monday are much higher than the 6 percent figure.

The company, which is based in San Jose, Calif., has been struggling as competition rises from companies like Juniper Networks and Hewlett-Packard in the computer networking equipment market.

The employee cuts are the third reorganization move Cisco has made in the last six months. The company revamped its consumer business in April by killing off its Flip video camcorder business. In May it reorganized its management.

Also Monday, Cisco said it agreed to sell its set-top box manufacturing plant in Juarez, Mexico, to Foxconn Technology Group, a Taiwanese company that makes many Apple products. The plant’s 5,000 employees will join Foxconn in the first quarter of fiscal 2012, the company said.

Shares of Cisco closed regular trading down 15 cents at $15.44.

Article source: http://feeds.nytimes.com/click.phdo?i=698be41cde8ef3c1b84b796860dc9092