Is Cisco set to slash 5,000 jobs?
Analyst says that's how many layoffs needed for company to cut $1 billion in costs
Cisco Systems (NASDAQ: CSCO) might have to cut 5,000 jobs to meet its previous expense-reduction targets, an analyst told clients in a note Monday.
Gleacher & Co. analyst Brian Marshall said in order for the networking equipment vendor to achieve its goal of cutting $1 billion in costs for the 2012 fiscal year, it would need to eliminate 5,000 jobs, or about 7 percent of the company's more than 73,000 employees.
In May, Cisco warned that fourth-quarter results might be disappointing and laid out a plan to improve margins for the upcoming fiscal year, including cutting $1 billion in costs via, among other things, layoffs.
A Cisco spokesperson reiterated the company's spending-reduction goal but declined to comment on Marshall's note to clients, according to MarketWatch, saying merely, "We will provide additional detail on the cost reductions, including layoffs, on our next earnings call."
That call is scheduled to come after the market closes on Wednesday, Aug. 10, and clearly it will include news of layoffs. The question is how many. Marshall says 5,000. We'll know in about four weeks, when someone will anonymously leak the news to the media a couple of days before the earnings report.
Cisco core networking equipment business has struggled in recent years and its forays into consumer markets have been unsuccessful. In May the company announced a broad restructuring designed to eliminate bureaucracy and speed up decision making.
Shares of Cisco on Monday were down 31 cents, or 2.0 percent, to 15.43. For the year, Cisco shares are down 23.7 percent.