Cisco Sums It Up: Terminates 8% Of Workforce While Buying Back $1.5 Billion In Stock

Tyler Durden's picture




 

Moments ago Cisco reported a whole lot of numbers as part of its Q4 earnings release. For the most part these were largely irrelevant, but for the pedants out there here is what Wall Street is focusing on: revenue and EPS beats of $12.36 billion ($12.15 billion estimated) and $0.55 ($0.53 estimated) even as Chinese sales continue to crater, plunging 23% in the quarter: thank you NSA.

But the punchline was revealed into the conference call when John Chambers announced CSCO would proceed with another mass layoff, firing 6,000 people or 8% of its workforce.

Putting this number in context, CSCO also announced it had just spent $1.5 billion in the quarter to repurchase 61 million shares of its stock, bringing the total for 2014 to $9.5 billion (including $3.8 billion in dividends).

So, in case there is some confusion, here is a side by side: assuming the terminated 6,000 jobs paid a generous salary of $100,000 per year, that means CSCO, net of restructuring charges of course, just cut down on some $600 million in annual compensation. Truly impressive cost-cutting. And yet, one wonders: if CSCO was indeed so focused on preserving cash and streamlining its operations would it also spend more than double that amount in just one quarter on repurchases.

 

An even more stunning stat: since 2011 Cisco has repurchased $21.9 billion in stock. Since then, it has fired 21,000 people.

Bottom line: terminate the workers, reward the shareholders, courtesy of the Fed's ZIRP policy allowing Cisco to issue debt at virtually zero cost. Thank you Bernanke.

And now, we shift to the Department of Labor, which next week will announce that weekly layoffs dropped to fresh near-decade lows, when by now everyone surely realizes, this is nothing but a pathological, outright lie.

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Wed, 08/13/2014 - 18:19 | 5089456 Buckaroo Banzai
Buckaroo Banzai's picture

Giant corporations eating themselves and crapping out employees. It's the 21st century way!

Wed, 08/13/2014 - 18:26 | 5089501 wee-weed up
wee-weed up's picture

Obozo's 6th Annual Summer of Recovery!

Wed, 08/13/2014 - 18:31 | 5089523 SHEEPFUKKER
SHEEPFUKKER's picture

Even the corporate buyback and layoff specialists will be EBT'ing it shortly. 

Wed, 08/13/2014 - 18:35 | 5089542 kliguy38
kliguy38's picture

I'd like to see John Chambers munching a EBT card instead of the carpet in his office

Wed, 08/13/2014 - 18:49 | 5089605 gh0atrider
gh0atrider's picture

Cisco forward gh0atrider's blockchain packets!!

Wed, 08/13/2014 - 20:12 | 5090012 espirit
espirit's picture

Pretty much sums up CapEx for the IT industry.

RIP.

Wed, 08/13/2014 - 20:52 | 5090164 aVileRat
aVileRat's picture

Yeah, expect those gross margins to collapse when BRIC's learn they can get switches & routers from China for 80%, with 100% of the vendor support.

It's going to suck for ALT and IBM when this ripple effect goes upstream. VM ware is just a fraud, 60% of what it claims to do can be hacked by a bunch of drunk 1st year Annon's.

 

 

Wed, 08/13/2014 - 21:08 | 5090212 wee-weed up
wee-weed up's picture

Yep, buy the ones from China with ChiCom hacks built in...
Or ones from the US with NSA hacks built in.

Wed, 08/13/2014 - 19:52 | 5089929 Freddie
Freddie's picture

LOL!   Nobody wants USA-NSA-Obama spy shit hardweird and softwear from Silly Con Valley.  F em!   I bet most of Cisco's employees voted for Obama including all those H1B's.

F Silly Con Valley - F Stanford which has always been a big See Eye Aye hangout along with Cal Tech. F em!

Wed, 08/13/2014 - 20:07 | 5089989 pitz
pitz's picture

It won't be the H-1B's laid off.   It will be the few Americans still left working at Cisco.

Wed, 08/13/2014 - 18:32 | 5089532 Antifaschistische
Antifaschistische's picture

Well, we know the formula.

Even corporations have 1%'ers.  at CSCO it's probably 5%.   But lucrative stock options make keepting the stock price up, a triple top priority.

 

Wed, 08/13/2014 - 18:42 | 5089581 rosiescenario
rosiescenario's picture

...and their Board members, also with options, readily approve it....and the mutual funds which must show quarter to quarter performance are also all for it.

Wed, 08/13/2014 - 18:22 | 5089469 algol_dog
algol_dog's picture

Any wonder why consumers aren't buying anything? How secure can you feel in this world?

Wed, 08/13/2014 - 18:29 | 5089514 Spitzer
Spitzer's picture

This is full bore retard right here boys. The last few headlines ... I mean... This is fuct

Wed, 08/13/2014 - 18:40 | 5089570 Citxmech
Citxmech's picture

The wheels are really starting to come of the cart now, eh?

Wed, 08/13/2014 - 19:16 | 5089725 pods
pods's picture

Sing with me:

"The wheels on the bus have fallen off, fallen off, fallen off.........."

pods

Wed, 08/13/2014 - 19:42 | 5089867 Darksky
Darksky's picture

Theres a hole in the bucket, dear liza dear liza.

(Deleted link to wiki page with full lyrics cuz the link was broken dear henry dear henry)

Wed, 08/13/2014 - 19:55 | 5089946 Buck Johnson
Buck Johnson's picture

They don't feel secure.  And this fake economy is making it seem that everybody is working and if they aren't they are retired etc. etc.. 

Wed, 08/13/2014 - 21:12 | 5090224 Freddie
Freddie's picture

Oddly enough I was checking out some cloud storage reviews on the web.  Some site pimping Drop Box and other US services.

People were posting responses with better and cheaper (many free with 100 G storage) in France, Switzerland, Finland and other places.  People posting stay away from anything in Obama-Ferguson-NSA-Amerika.  No one trusts America anymore.  Scum country filled with TV watching restards.

Wed, 08/13/2014 - 18:24 | 5089474 max2205
max2205's picture

With fringe and overhead, it's about 200,000 or 1.2 billion

I am so glad i am out of corp

What a bunch of Dickheads

Wed, 08/13/2014 - 18:38 | 5089553 BlindMonkey
BlindMonkey's picture

I am in the industry and 100k per head is about as light as the SAN Fran average rent numbers that was posted today.

Wed, 08/13/2014 - 21:12 | 5090230 pitz
pitz's picture

Secretaries and janitors aren't pulling in the 200k, even with the benefits.  In an organization like Cisco/Google/etc., you have a number of these staffers working in support of each engineer or software developer. 

Wed, 08/13/2014 - 23:09 | 5090642 BlindMonkey
BlindMonkey's picture

Cisco pulls in 750k-ish per employee.  The janitors are all on contract.  Can't dilute the numbers with the true peons.

Wed, 08/13/2014 - 20:18 | 5090014 Fred Hayek
Fred Hayek's picture

The actions of american corporations in the last few years will be taught for decades as the flailings of completely corrupt morons.

Professor: Class, today we're going to look at some case studies of businesses in the United States in the late first and early second decades of this millenium, the time leading up to the so called Bankster Crash of 2015. At that time, class, the currency in the United States was issued by a private central bank called, ironically, the Federal Re-

Girl in the front row: But, professor, how can a central bank, if you even have such a thing, be private?

Professor: That's a long story, Katie. It was essentially a scam perpetrated on the public by large private banks and corrupt politicians. But, back to the issue at hand. It was the early 2010's and despite the steady fall of the economy in the United States, the stock market was going up and up to record heights.

Boy in the back: How can that possibly happen? If the economy goes bad stocks as a whole have to go down in ounces.

Professor: Well, there was another sort of scam going on, Steven and, just so you know, at the time, things were priced in dollars, which were just worthless pieces of paper but everyone just agreed to accept them as currency.

Boy in the back: Buddha! Was there anything honest in those days? Professor: Watch your language, Steven. No, there wasn't much that was honest. One of the most dishonest practices was something called stock buy backs. Corporations called I-B-M and Apple-

Girl in the front row: Like the fruit?

Professor: Yes. Corporations would take out loans to buy back shares of their stock from the general public in order to make the ratio of their earnings divided by their shares look better, by lowering the denominator of that fraction.

Boy in the back: But, isn't it the most basic rule of stocks that you should try to buy low and sell high?

Professor: Yes.

Boy in the back: Then why would a corporation do that? And why didn't the rudkowskis tell everybody about it and stop it right there?

Professor: They called them "reporters" in those days, Steven. But the 2010's was an exceptionally dishonest time in our history. There were very few rudkowskis and a lot more men in the media like someone called Jim Cramer who were happy to profit from lying and corruption. Does anyone in the class remember where they've heard the name Jim Cramer?

Girl in the front row(raising hand) In the famous statue on Wall Street that warns brokers what might happen to them, he's the man whose head is on the protester's pike, recreating the famous scene from the Wall Street purging of 2016.

Professor: That's right. Now, class, look at the chart on page 342 and . . .

Wed, 08/13/2014 - 20:40 | 5090121 SteveGennisonBa...
SteveGennisonBallWasher's picture

Right said, Fred.

Wed, 08/13/2014 - 18:23 | 5089476 kchrisc
kchrisc's picture

"I lost my job to a stock-buy-back. Damn stock-buy-backs taking everyone's jobs."

 

An American citizen, not US subject.

Wed, 08/13/2014 - 18:24 | 5089485 Irishcyclist
Irishcyclist's picture

Hollowed Out companies.

I wonder how many more already outsourced jobs will be vapourised as a result of 6,000 direct job losses?

Wed, 08/13/2014 - 18:26 | 5089489 max2205
max2205's picture

News flash IBM layoff all humans

Buys back 100% of stock

Wed, 08/13/2014 - 18:26 | 5089494 scaleindependent
scaleindependent's picture

Automation coming to IT as well. It's funny how ZH pokes fun at fast food workers when they get cut by automation and robots, but then it becomes (at least to me) somewhat indignant when the techies get fired.

Wed, 08/13/2014 - 23:16 | 5090660 Cthonic
Cthonic's picture

Sooner than most people realize. F* it all, you can verify with my twelf in coq.

Wed, 08/13/2014 - 18:26 | 5089497 Dr. Engali
Dr. Engali's picture

6000 future Walmart greeters and part time burger flippers. Welcome to the new America.

Wed, 08/13/2014 - 18:39 | 5089564 BlindMonkey
BlindMonkey's picture

I will be amused to see the H1B guys flipping burgers.

Wed, 08/13/2014 - 20:07 | 5089997 pitz
pitz's picture

Doubt it will be any H-1B's.  This round of layoffs will be just yet another purge of American talent as H-1B's and foreigners take over Cisco and most other quality US STEM jobs. 

Wed, 08/13/2014 - 20:00 | 5089962 Freddie
Freddie's picture

F them and their NSA-Obama spy shitware.  

California is shit.  I bet 75% of Sillycon Valley voted Obama - TWICE!  In California you have the lib assholes in So Cal pushing movie scripts and in Nor Cal they are pushing the next cool app/IPO.   F em!

Wed, 08/13/2014 - 23:59 | 5090763 napper
napper's picture

Well, Obama is merely a puppet. And the tech people didnt have a clue about the real political power structure of the government

Wed, 08/13/2014 - 18:27 | 5089502 Seasmoke
Seasmoke's picture

Send the Fed to the Gas CHAMBERS. 

Wed, 08/13/2014 - 18:37 | 5089551 adr
adr's picture

The gas chamber is rather humane. I'd rather use some good old fashioned medieval torture methods.

 

Wed, 08/13/2014 - 18:40 | 5089568 BlindMonkey
BlindMonkey's picture

Like naked videos of Mr. Yellen playing with a dildo.

Wed, 08/13/2014 - 19:13 | 5089716 stopcpdotcom
stopcpdotcom's picture

(S)he wouldn't make much as a cam girl.

Wed, 08/13/2014 - 19:45 | 5089899 VegasBob
VegasBob's picture

That visual almost made me puke...

Wed, 08/13/2014 - 23:57 | 5090761 napper
napper's picture

That's not torture to Yellen; that's visual torture to the viewers.

Fri, 08/15/2014 - 00:18 | 5095995 BlindMonkey
BlindMonkey's picture

I assure you that was my point.  :)

Wed, 08/13/2014 - 18:43 | 5089505 Gringo Viejo
Gringo Viejo's picture

Gather weapons and ammo. Food and water.
Quit fucking around. It gets worse from here.

Wed, 08/13/2014 - 18:54 | 5089632 Ass. Manager
Ass. Manager's picture

Word!

Wed, 08/13/2014 - 22:08 | 5090443 espirit
espirit's picture

Already have a big screen TV.  What we need is a little trial run disruption so I can snag an APC from the dealership.

Wed, 08/13/2014 - 22:14 | 5090466 espirit
espirit's picture

On the serious side...

Plant some Moringa, identify the Lamb's Quarters and Shepherd's Needle in your yard.

All edible.

Wed, 08/13/2014 - 22:19 | 5090489 espirit
espirit's picture

@ G V

59grains 4350 behind a 150gr. pill will give the 06 a flat shoot to 300yrds.

Wed, 08/13/2014 - 22:50 | 5090571 Gringo Viejo
Gringo Viejo's picture

175 grain....30.06....Remington 760 Gamemaster Scoped.
Molon Labe. Beautiful walnut finish. A shame to have to fire it to protect.

Wed, 08/13/2014 - 19:53 | 5089936 himaroid
himaroid's picture

Huff puff! Hustling to prep. Find time to cruise around rocking and partying wilth old friends a few more times too. This crap will soon wipe the smile off my face. Game face time.

Wed, 08/13/2014 - 18:31 | 5089521 NOTaREALmerican
NOTaREALmerican's picture

This will be a wonderful opportunity for those layed off to improve their skills in order to find another high-paying IT job in the Social Networking Industry.  

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