HOME     MENU     SEARCH     NEWSLETTER    
NEWS & INFORMATION FOR TECHNOLOGY PURCHASERS. UPDATED 6 MINUTES AGO.
You are here: Home / Hardware / Cisco Records 18% Growth, Cuts 4,000
Build Apps 5x Faster
For Half the Cost Enterprise Cloud Computing
On Force.com
Cisco Records 18% Growth, Then Cuts 4,000 Amid Concerns
Cisco Records 18% Growth, Then Cuts 4,000 Amid Concerns
By Seth Fitzgerald / NewsFactor Network Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
AUGUST
15
2013

Cisco reported impressive 18 percent growth in its latest financial statement but is nonetheless moving forward with massive job cuts. The company said Thursday it was cutting 4,000 jobs because sales growth had been too slow and it was concerned regarding how stable the future would be.

The 18 percent growth resulted from growing demand for networking devices now that mobile phones, computers, tablets and other devices are taking over many households. Sales of Cisco's routers, modems, and access points increased but are now beginning to slow.

Shares Plummet, Inconsistent Sales

News of the cuts brought a massive dip in Cisco's share value Thursday. Shares fell 9 percent after pre-market trading saw a slightly smaller sell-out. Revenue, profit and sales were all measurably higher than they were last year during the same period, but Cisco expressed concern about the future.

Sales were up in the United States by 5 percent, whereas Cisco was down in its Asian market.

"This recovery is more mixed and inconsistent than the others I have seen," CEO John Chambers told analysts. "The environment in terms of our business is improving slightly but nowhere near the pace that we want."

Instead of the massive improvements that Chambers and other executives were hoping to see, the 18 percent growth -- which many companies would love to see -- was not enough to ease Cisco's worries. Advances in cloud computing from other companies have left Cisco in an awkward spot. Newer cloud technologies allow businesses to store their data on private servers, which are more effective and cheaper than what Cisco offers.

The Cutting Solution

In order to speed up innovation and respond to what Cisco's customers want, Chambers and the other executives have decided to cut 5 percent of Cisco's total workforce. By becoming a slimmer company, they hope that it can turn around and produce faster growth since they are still in recovery mode.

Getting rid of employees has been Cisco's response to many bad financial reports; this will be the third round of cuts in the past year. In March, 500 employees were laid off, and in July, 1,300 jobs were eliminated.

Of course, profits will always rise when jobs are cut but Cisco can only continue down that road so long before it has no one left. Instead of getting rid of all of its workers, Cisco needs to find a way to navigate in the cloud market.

Chambers said he was still confident Cisco could be the No. 1 IT company in the world. The decision to cut was also influenced by global instability.

"The inconsistency of global GDP growth, and lots of time you see northern Europe start to get stronger, you see the issues in emerging markets start to get softer. You see us successful in one category, switching, and you see us not as successful except in the edge in terms of the routing."

Tell Us What You Think
Comment:

Name:

Like Us on FacebookFollow Us on Twitter
TOP STORIES NOW
MAY INTEREST YOU
Salesforce.com is the market and technology leader in Software-as-a-Service. Its award-winning CRM solution helps 82,400 customers worldwide manage and share business information over the Internet. Experience CRM success. Click here for a FREE 30-day trial.
MORE IN HARDWARE
Product Information and Resources for Technology You Can Use To Boost Your Business

NETWORK SECURITY SPOTLIGHT
An easily avoided security lapse -- failure to use two-factor authentication on a single server -- is being blamed for the massive computer breach that hit JPMorgan Chase this past summer.

ENTERPRISE HARDWARE SPOTLIGHT
Flying under the radar just before Christmas, HP has launched a new version of its Chromebook 14, most notable for its touch screen and full high-definition display, plus more powerful specs.

MOBILE TECHNOLOGY SPOTLIGHT
The Rockstar Consortium backed by Apple, Microsoft, BlackBerry, Sony and Ericsson, just sold the smartphone patents it was holding to the RPX Clearinghouse for $900M.
© Copyright 2014 NewsFactor Network, Inc. All rights reserved. Member of Accuserve Ad Network.