Cisco preparing for massive layoffs?

By Geoff Duncan July 12, 2011

Cisco CEO John Chambers — Image used with permission by copyright holder

Networking and communications giant Cisco is reportedly preparing for the largest layoffs in the company’s history as CEO John Chambers tries to slash some $1 billion off the company’s expenses to make the company’s bottom line look better. Cisco currently has about 72,000 full time employees and an unknown number of contractors. Media reports of estimated layoffs range anywhere from 3,000 to has high as 10,000—Reuters is currently reporting on the lower end, with Bloomberg stretching out with larger figures.

Industry watchers expect the positions will be eliminated through a combination of outright layoffs and encouraging employees to opt for early retirement packages.

Cisco has been the dominant name in networking, IP routing, and switching gear for over two decades. In recent years the company has made moves to enter new markets, mainly through high-cost acquisitions. Although the company has seen come success with its corporate video conferencing offerings, the Cisco’s venture into consumer video with Flip ended in a rapid shutdown earlier this year. At the same time, the company’s core switching business has been dogged by increased competition from the likes of Hewlett-Packard, Huawei, and other manufacturers.

The news comes in the wake of Cisco CEO John Chambers outlining a plan last May to substantially reorganize the company, focusing on five key market segments and eliminating the company internal “councils,” which have been criticized for adding unnecessary layers of bureaucracy and lag to the company’s operations. Chambers hoped to have a new sales organization in place by the end of this month.

A formal announcement of layoffs is expected to coincide with Cisco’s fourth fiscal quarter financial results, early next month.

Cisco’s last major round of layoffs was in 2002, following the dot-com bust.

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