Cisco beat Wall Street expectations in Q4, and the company turned a $2.8 billion profit on sales of $12.5 billion. So what are the “job creators” at the company doing with that success? They’re downsizing by 4,000 workers.
Immediately following the company’s financial information conference call, Cisco CEO John Chambers revealed that the tech giant will cut 4,000 positions from across the firm. That number equals approximately five percent of the entire Cisco staff.
The layoffs will start in 2014 and Cisco has not revealed what divisions of the company will be hurt most by the cuts.
While Cisco beat Wall Street expectations, the company failed to increase sales and profits at the level it had estimated. Cisco earned $0.42 per share but had hoped to earn $0.44 per share.
Speaking about the current economic climate, the company’s CEO said the market is “challenging and inconsistent” but that he was “real pleased” with Cisco’s growth.
Chambers said the company is “just not growing as fast as we need,” which lead to the layoffs.
Based on financial results and the company’s decision to fire 4,000 employees Cisco stock fell by 9.5 percent in after-hours trading to close at $23.89. Trading volume since the financial report has been listed as “well above average.”
After the global economy collapsed and Cisco began experiencing increased competition the company announced restructuring plans. Last year the company laid off 2 percent of its workforce or approximately 1,300 employees. The prior year Cisco cut 6,500 jobs.
Over the last 12 months, Cisco has continued to place more of its focus on software through the acquisition of several very strategic software firms.
Do you think Cisco is acting responsibly in scaling back its business amid increased competition, or has the company simply given into corporate greed?