Silicon Valley, California, United States (4E) – In another drastic move, network giant Cisco had again slashed jobs in its workforce after a quarter of tepid sales growth. The latest job cuts total 6,000 jobs or 8% of its global employee headcount. This is another sign that Cisco is floundering in its expansion into new markets as well as difficulty in competing with other companies in its market.
Their 2014 fourth quarter report would include a pretax charge of nearly USD700 million for its restructuring costs. Just last year, the company’s management had announced it would cut 4,000 jobs from its rolls, which is 5% of its total workforce in 2013. Also included in the report are numbers indicating its economic doldrums are nearing an end, as the quarter’s earnings outpaced its projections for the period.
The layoff announcement was made by Cisco CFO Frank Calderone during a conference call with financial analysts. He also confirmed that the company’s per share profit for the fourth quarter of 2014 was set at USD0.55. He also reported USD12.5 billion in sales, topping earlier projections of per share profits of USD0.53 on USD12.1 billion sales revenue. On the downside, its shares on the stock market fell by USD0.30 or nearly one percentage point.
Overall, the company in 2014 netted USD47.1 billion in sales, 3% short of previous year’s sales. Its per share earnings for the year was at USD2.06.
According to Cisco Chairman and CEO John Chambers, “We are executing well in a tough environment and delivered our best non-GAAP earnings per share quarter in our history. I’m pleased with how we are transforming our company over the past several years and that journey continues. “
He continued, “We are focused on growth, innovation and talent, especially in the areas of security, data center, software, cloud and internet of everything. Our strategy is sound, our financials strong and our market leadership is secure.”
The announcement was seconded by CFO Calderoni, who said, “We returned a record USD13.3 billion to shareholders this fiscal year through share buybacks and dividends.”
One of the key areas Cisco is focusing on is the Chinese information technology industry. The market is projected to grow by 7.1 percent or a value of USD111.7 billion in 2014. Thus the focus on this growth area has been one of the major business endeavors of the company. The company has been seen to struggle in the market by industry analysts and experts, owing to the restricted access foreign players are given in the burgeoning high technology hardware market.
As for the job cuts, Cisco’s CEO in an interview said, “We will exit this year with pretty much the same number of people we started the year with. Some groups will not be affected at all. Others will.” He added that these decisions are ‘designed to make room for adding different kinds of skills rather than cutting total costs.’