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Cisco to cut 4,000 jobs

Technology giant Cisco announced plans to cut roughly 4,000 staff, or 5% of its global workforce, despite reporting increases in revenues and profits in its fiscal fourth quarter.

Speaking on the firm’s earnings call, chief finance officer Frank Calderoni said that the workforce reduction would come during full year 2014, with CEO John Chambers justifying the move as a way to hasten the firm’s growth.

“What we see is slow steady improvement but not at the pace we want. If we’re going to lead in this industry the one thing I have learned over the years is you [have to be] the first mover. We have to very quickly reallocate resources, so a fair amount of those 4,000 people will be allocated to new growth opportunities,” said Chambers.

Cisco reported revenue of US$12.4 billion (€9.4 billion), up 6% year-on-year, for the three months ending July 27. Net income was US$2.3 billion, up 18.4% compared to the same quarter a year earlier.

Within this, revenues at Cisco’s service provider video division grew 23%, which it said was largely driven by its acquisition of TV software company NDS, completed last August for approximately US$5 billion. Services revenues grew 6% representing 22% of total revenue.

“In every case, we exceeded the midpoint of our guidance. We also generated $4 billion in operating cash flow in the quarter, another record,” said Chambers.

He added: “confidence in our ability to be the number one IT Company is increasing. Our fourth quarter was a record on many fronts, with record revenue, and record non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share.”

However, referring to the cuts he said: “My key takeaway is I am real pleased with our momentum in the market it just is not growing as fast as we need.”