In a bid to save in the region of $1 billion a year, networking and communications giant Cisco has announced plans to cut 9 percent of its workforce. It will also sell a set-top box factory to Taiwan-based Foxconn.
The news of the job losses comes several months after Cisco chairman and CEO John Chambers (pictured) spoke of the need for change in order to make the company more competitive. In news posted on its website on Monday, Cisco said around 6,500 jobs would be lost. Of these, some 2,100 will be taking part in a voluntary early retirement program. The cuts come from a workforce of about 73,000.
The losses represent 9 percent of the company’s full-time workforce and 15 percent of executive-level staff (vice president and above). A Reuters report says that the losses will take place in the US, Canada, and a number of other countries. Those affected will be notified next month.
On top of these job cuts, the Silicon Valley company also announced that Taiwan-based Foxconn would be taking over its manufacturing facility in Juarez, Mexico. Five thousand workers will be taken off the Cisco payroll in the move.
The company said on its website: “While these decisions do not come easily, we believe we have right-sized the organization and realigned our workforce to support our priority areas, while retaining the capabilities and talent to effectively support our long-term strategy. Our impacted employees will be treated with respect and receive appropriate severance benefits.”
According to the Financial Times, Cisco will incur severance expenses of $750 million this quarter, and another $550 million in the next fiscal year. Cisco shares have taken a major hit over the past year, losing almost a third of their value.
In April, the company announced the closure of its Flip camcorder business, with the loss of 550 jobs. Two years earlier it paid more than half a billion dollars for the product line.
Monday’s grim news came on the same day that the US’s second largest bookseller, Borders, announced that it would be closing all of its bookstores over the coming months with the loss of almost 11,000 jobs.