Spin This: Cisco To Fire 10,000

Tyler Durden's picture

A year after the outgoing secretary of the treasury top ticked the economy and ushered in QE 2 with his abysmal NYT op-ed "Welcome to the Recovery" it is only appropriate that we get news that Cisco is preparing to fire 10,000, or 14% of its entire workforce, over and above the number of people that the company said was going to be let go in May. "The cuts include as many as 7,000 jobs that would be eliminated by the end of August, said the people, who asked not to be identified because the plans aren’t final. Cisco, based in San Jose, California, is also providing early-retirement packages to about 3,000 workers who took buyouts, the people said. Cisco Chief Executive Officer John Chambers is slashing jobs and exiting less-profitable businesses as competitors such as Juniper Networks Inc. (JNPR) and Hewlett-Packard Co. (HPQ) take market share in Cisco’s main businesses with lower-priced, simpler products. Sales of Cisco’s switches and routers, which made up more than half of revenue last year, will continue to slip, said Brian Marshall, an analyst at Gleacher & Co." All in the name of the bottom line: "Eliminating jobs will help Cisco wring $1 billion in expenses in fiscal 2012, the company said in May. Cisco expects costs of $500 million to $1.1 billion in the fiscal fourth quarter as a result of the voluntary early retirement program, it said in a quarterly filing."

More on Cisco:

“We will provide additional detail on the cost reductions, including layoffs, on our next earnings call,” Karen Tillman, a spokeswoman for Cisco, said in reference to an earnings call scheduled for early August. She declined to discuss job cut figures.

The voluntary retirement packages included one year’s pay and medical benefits, and were offered to about 5,800 employees, two people said.

“The revenue trajectory hasn’t been where it should be,” Marshall, who has a “neutral” rating on the stock with a target price of $17, said in an interview. “The company is not staffed on an appropriate level. They simply have too many employees.”

Cisco said in May that it shuttered the Flip video-camera unit and cut 550 jobs. The company may eliminate more positions in the consumer-product unit, which makes Linksys home- networking equipment, Marshall said. Some investors have said the company should exit consumer products entirely to focus on traditional enterprise offerings such as routers and switches. Cisco’s equipment is used by corporate networks and telephone and Internet service providers to direct Web traffic.

Trimming about 5,000 jobs would reduce operating expenses by about $1 billion annually and boost 2012 earnings by about 8 percent, Marshall said.

We expect many other companies to follow
suit in order to eliminate even more "overhead", or as it is better
known, fat. And while S&P500 EPS may get a modest boost out of this
latest upcoming firing wave, it means that the next leg down in payrolls
is imminent.

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Arius's picture

paging LaVorgna ...paging...

Rahm's picture

In unrelated news, 10k new applications submitted to graduate schools, hence another price increase in tuition!  Woo-hoo, GDP increase!

traderjoe's picture

Or applications to McDonalds.

Chuck Walla's picture

Grad schools will have more slots to fill.

Fukushima Sam's picture

Cisco is full of fat and needs some cuts.  I work with them a lot and I guarantee that in most interactions 30% of the people there these days are useless idiots.  After they get past this cut it will end up being good for them, provided they actually make the right cuts...

Agent 440's picture

LOL Right cuts.... makes me think about these economists that can't shoot straight.

Flakmeister's picture

As a rule of thumb, in any large organization, 30% of the people are idiots...

Gandalf6900's picture

 

You can make that 70% without a sweat

hannah's picture

the problem is that the 30% cut are the good people and the shite keep teir jobs.....

Jack Burton's picture

 Good point! Whenever vast layoffs happen, the layed off are told to go to school and improve their skills! So Grad Schools will surely pick a few thousand former CISCO workers looking to upgrade their skills for jobs that probably won't exist.

Blorf's picture

Or they can downgrade their skills from "network engineer" to "Chinese router assembly line worker" and take their place on the line for pennies an hour.

j0nx's picture

Give this man a cookie for he knows of what he speaks.

This is what I call change you can believe in bitches. I love asking people in traffic with Obama stickers how that change is working out for them. Most look at me with a quizzical look on their face like they have no idea wtf I am talking about. Bahh bahhhh....

LFMayor's picture

I usually just pop them the sailor's farewell when I blow by...

Thomas's picture

The economics of grad school is more subtle than that. Very few post masters candidates write checks and I can assure you that Universities are not going to scrape together more tuition and stipend packages. Expansion of graduate programs is not necessarily profitable (except MBA, LAW, and M-Eng.) The physical sciences surely will not expand.

FoodTiger's picture

10K laid off to be replaced by bobble head H1B visa holders.

dark pools of soros's picture

yes so they can still have 8 of them on a conference call and the other 2 local engineers doing all the planning and work...  but hey, they don't mind writing up 5 forms of status updates and chart results of incomplete bullcaca

trav7777's picture

...with all profits therefrom to support executive bonuses

Oh regional Indian's picture

Hey! Hey now! Been to India FT? Hmmmmm?

That outsourcing thing is a curse. I know it first hand. LAbour cost arbitrage across national boundaries. That's workign well in the EU too eh?

But India? I'd say it's been just plain BAD for us.

Take those numb/dumb/crumb jobs back.

But your crack-loving bankers love the arb to much as well as the middle-class being made here now, soon to be sheared too.

Big picture FoodT, big picture. Don't be a hater.

ORI

http://aadivaahan.wordpress.com/2011/03/01/on-outsourcing-and-its-ills/

 

Hedge Jobs's picture

paging HarryWanger is more like it! Where is that idiot, i have seen him around the site for ages? Wasnt he recomending everyone buy CSCO "for your kids" this time last year after their profit downgrade? He should be charged with child abuse.

Osmium's picture

+1  Child abuse.  That's some funny stuf right there.

Zero Govt's picture

Hamy has joined the ranks of rats leaving Obummas sinking ship... he was a paid shill of Obummas internet campaign but even he saw the light and couldn't push water uphill any longer

..so another winner (10,000 job losses) for Jobs Czar, Jeff Immelt. his expertise for the post presumably comes from sacking 34,000 of his own staff at GE ...wonder if he's considering his position too or will continue looking another usless Obumma jack-ass?

drswhaley's picture

So Chambers should be appointed to the blue ribbon panel set up by Immelt on jobs.  He is now more than qualified.  The real crime is that Chambers hasn't lost his job - stock has done nothing but he has managed to rape the company with his options pay package.

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Michael's picture

Read and make extraordinary comments. Please don't hock your wares, we're all full up here and it's not kosher. Thanks.

mick_richfield's picture

Michael -- you're talking to a twenty-line Perl script. 

At120's picture

Maybe they can work for McDonald's?  I hear they're hiring...

 

 

knowless's picture

that's what their website says, but I never got a call back..

j0nx's picture

I have noticed a literal shit ton of white people working at my morning coffee McDonald's in the past year. For the 8 years prior to that the morning crew was almost entirely Hispanic but lately it's about half and half. Times must really be tough for some folks.

bob_dabolina's picture

Spun: 

That's 10,000 people that won't be laid off again. 

dlmaniac's picture

No need to spin. Just re-use the old script: Bush's fault!!

bob_dabolina's picture

We can use Nancy Pelosi's crib notes. 

Seeing as unemployment benefits are the best way to stimulate the economy, we have 10,000 more reasons to be optimistic about this recovery.

"Unemployment benefits are creating jobs faster than practically any other program, House Speaker Nancy Pelosi claimed Thursday."

http://michellemalkin.com/2010/07/01/pelosi-unemployment-checks-best-way-to-create-jobs/            

And they can't figure out why the economy is suffering like it had chronic obstructive pulmonary disease.

rufusbird's picture

Damm, I like it...Next time anyone asks me where I work I am going to tell them I work for Nancy Pelosi...!

Mr. Lucky's picture

That's another 10,000 on food stamps; and watching day time TV.  More bread and circus for the sheeple.

Hard1's picture

Spin v2.0:  It will be weather related in next month's NFP number

berlinjames02's picture

Who else remembers Chambers' interview on 60 Minutes wanting a 'tax holiday' to repatriate all that money so Cisco could create jobs?

If you don't remember it, here it is: http://www.cbsnews.com/video/watch/?id=7360936n

Did JC-superstar just play chicken with the government? Looks like only losers in that game are the 10,000 employees in San Jose.

sun tzu's picture

How would a tax holiday have saved those jobs? They were laid off due to competition from Juniper and HP

fonestar's picture

Does this make my CCNA less valuable?

MarketTruth's picture

Cisco is located in the Republik Of Kalifornia? That is a HUGE mistake.

LetThemEatRand's picture

And now the tech jobs start to move overseas.  But keep blaming taxes instead of the ready availability of global cheap/slave labor due to "free trade" policies that were supposed to help the U.S. middle class.  

dark pools of soros's picture

hey, the easy way to take over a country..  just give them free food and rent and netflix and they'll never know that the 'outside' doesn't even use English anymore...eventually just chop them all up and make a new section in the Chinese buffet called 'american',,,  right next to the sweet & sour alley cat

Oh regional Indian's picture

Your comment somehow reminds me of that Jim Carey movie, The Truman Show.

ORI

FinalCollapse's picture

So are Juniper and HP - their main competitors. Juniper is just a few miles away from Cisco.

 

rufusbird's picture

Exactly! If they would simply have annouced that they were moving to Wyoming, half the people would have quit and they would have saved a ton on severance pay!

infiniti's picture

Is this the reason why ES plunged?

SloMoe's picture

No, that was me. I'll give you a heads up next time.

SloMoe's picture

That's 10,000 people given the opportunity to re-optimize their job skills...elsewhere.

dwdollar's picture

Hell ya.  Those 50 year old Electrical Engineers will make great contributions as laborers rebuilding the nations infrastructure for government contractors using stimulus funds printed from nothing.

Manthong's picture

Should be plenty of new positions for network experts in Obama's new Cyber Secretariat.

Protonrick's picture

double post. sorry