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August 18, 2016
US networking gear giant Cisco has announced it will be cutting 5,500 jobs in order to reinvest the consequent savings on strategic growth areas like IoT, cloud, datacenters and collaboration.
The announcement was made as part of the company’s quarterly earnings announcement, which revealed flat revenue growth but improved profitability. It looks like traditional Cisco markets such as service providers are keeping their belts tight right now, hence the need to prioritise diversification. In this sense Cisco is in a similar position to strategic partner Ericsson which, of course, has had its own high profile redundancies recently. Maybe the two companies should think about formally tying the knot.
“We had another strong quarter, wrapping up a great year. I am particularly pleased with our performance in priority areas including security, data center switching, collaboration, services as well as our overall performance, with revenues up 2% in Q4 excluding the SP Video CPE business,” said Chuck Robbins, CEO of Cisco.
“We continue to execute well in a challenging macro environment. Despite slowing in our Service Provider business and Emerging Markets after three consecutive quarters of growth, the balance of the business was healthy with 5% order growth. This growth and balance demonstrates the strength of our diverse portfolio. Our product deferred revenue from software and subscriptions grew 33% showing the continued momentum of our business model transformation.”
Light Reading notes in its in-depth coverage of the Cisco quarterlies that announcing redundancies is a bit of a summer tradition for the company. A leak yesterday indicated the job losses would be in excess of 14,000, so the eventual news was almost a relief, with Cisco shares only down a percent or two at time of writing. It’s almost as if someone deliberately leaked a higher number to lessen the impact of the announcement.
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Scott has been covering the mobile phone and broader technology industries for over ten years. Prior to Telecoms.com Scott was the primary smartphone specialist at industry analyst Strategy Analytics’. Before that Scott was a technology journalist, covering the PC and telecoms sectors from a business perspective.
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