Cisco Systems, the largest maker of networking equipment, will cut as many as 14 000 employees worldwide, or 20% of its workforce, CRN reported, citing people close to the company.
San Jose, California-based Cisco will announce the cuts in the next few weeks, CRN said on Tuesday, without naming its sources. Andrea Duffy, a spokeswoman for Cisco, declined to comment on the report.
CEO Chuck Robbins, who took over in July 2015, has been working to boost growth by shifting Cisco’s offerings toward software-based networking, security and management products, which customers increasingly prefer because they’re less expensive and more versatile. Cisco will report fiscal fourth quarter earnings on Wednesday after the close in New York. Analysts project a 2% decline in sales to US$12,6bn.
Cisco had about 73 100 employees as of April, according to data compiled by Bloomberg. The company last announced a large round of firings in August 2014, when it eliminated 6 000 positions.
The new emphasis on software is requiring staff with a different set of skills, CRN reported. Many early retirement plans have already been offered to employees, the website reported.
Cisco has shown its appetite for software with recent acquisitions, such as Jasper Technologies, which makes programs that let companies connect all manner of electronic devices.
Results released in May showed that Robbins is making headway in rejigging Cisco’s businesses. The company projected sales growth of as much as 3% in the period that ended in July, compared with analysts’ projections for a revenue decline. Even so, Robbins said the company still has a long way to go and that earnings are not where they should be.
Cisco’s biggest division, switching, had third quarter sales of $3,45bn, a decline of 3% from a year earlier. Its second largest division, routing, suffered a 5% drop in sales to $1,89bn, the company said. Newer units including security, service provider video and collaboration all posted sales increases of more than 10%. — (c) 2016 Bloomberg LP