Cisco to ax 6,000 jobs due to sluggish emerging markets, routing sales

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Cisco is going reduce its headcount again, announcing that it will cut 6,000 jobs due to slumping sales of its core routing and switching products and slower-than-expected growth in emerging markets.

This is the third time the vendor has had to reduce its headcount in recent years. In August 2013, it announced that it would lay off 4,000 workers. Earlier, in 2011, it planned to cut 11,000 employees from its roster. 

Cisco's CEO and Chairman John Chambers attributed the job cuts to challenges in emerging markets, particularly in China and Brazil, where sales have slowed and it is facing more competition from vendors such as Huawei. Product orders in China dipped 23 percent, while Brazil dropped 13 percent.

"Unfortunately, as we look out, we don't see emerging markets growth returning for several quarters and believe it could get worse," said Chambers during a call with analysts, reports Reuters.

However, the vendor did see gains in the United States, where orders grew 5 percent year-over-year. U.S. commercial and enterprise customer bookings grew 17 and 16 percent, respectively.

Meanwhile, in Europe Cisco saw revenues stabilize. The UK market grew 6 percent year-over-year, while Germany grew 16 percent during the same period with growth in both the commercial and enterprise segments.

From an overall product revenue perspective, Cisco's router and switching declined 7 percent and 4 percent year-over-year, respectively, due to slower adoption of its new products. Alternatively, data centers revenues rose 30 percent, and security sector revenues rose 29 percent.

Cisco posted a smaller-than-expected 0.5 percent decline in fiscal fourth-quarter revenue to $12.4 billion. Financial analysts polled by Thomson Reuters I/B/E/S forecast total revenues of $12.1 billion.

Shares of Cisco were listed at $24.60, down 60 cents or 2.40 percent, in Thursday morning trading on the Nasdaq stock exchange.

For more:
- see the earnings release
- Reuters has this article

Special report: Wireline telecom earnings in the second quarter of 2014

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