Cisco to lay off 4,000 employees even as fiscal Q4 revenues rise to $12.4B

Cisco (Nasdaq: CSCO) reported a positive fourth quarter with revenues rising 6.2 percent year-over-year to $12.4 billion, but the company's CEO John Chambers said that the market is not recovering fast enough and it will have to cut costs.

John Chambers, Cisco

Chambers (Image source: Cisco)

"What we see is slow steady improvement, but not at the pace we want," Chambers said during the company's earnings call.

As a result, the vendor will lay off 4,000 employees, or about 5 percent of its workforce. By conducting these job cuts, the vendor said that the cuts would drive up to $550 million in pretax charges.

News of the job cuts did not sit well with investors as the vendor's stock dropped 9.5 percent to $23.88 in after-hours trading on the Nasdaq stock exchange.

This is not the first time Cisco has taken out the axe. In 2011 the vendor cut 6,500 workers, or 9 percent of its employee base. Besides cutting jobs, the vendor also shed non-core businesses, shutting down its Flip camera business and selling its Linksys home networking unit to Belkin.  

From a regional and product segment perspective, results were a mixed bag.

While the Americas region rose 5 percent, sales in Asia and China declined 3 and 6 percent, respectively.

In the product segment, the switching and service provider video units were the stars, rising 5 and 23 percent to $3.8 billion and $1.2 billion. Another bright spot in its portfolio was data centers, which rose 43 percent to $593 million. However, its flagship routing business remained flat at $2.1 billion.

The company's net profit for three months to 27 July was $2.3 billion, or 42 cents per share, up 18.4 percent from $1.9 billion or 36 cents per share in the same period a year ago.

Cisco shares were listed at $24.53, down $1.85, or 7.01 percent in Thursday morning trading on the Nasdaq stock exchange.

For more:
- see the earnings release
- WSJ has this article (sub. req.)

Earnings roundup: Wireline telecom earnings in the second quarter of 2013

Related articles:
Cisco shares jump 11.8 percent, reports "encouraging" net sales of $12.2 billion
Cisco targets network convergence with Catalyst 3850
Juniper CEO retiring amid growing competition
Cisco finished well in a recent unified communications survey

Suggested Articles

In the face of mostly flat revenues and competition from new startups, Cisco hasn't been sitting on its hands the past five years

New SRG data shows hyperscale operators accounted for 33% of all spending on data center hardware and software in the first three quarters of 2019.

Automating your network’s operational processes is the goal, but you can’t automate what you can’t see.