Networking equipment giant Cisco Systems Inc may cut nearly 10,000 jobs, about 14 percent of the company’s workforce, in an attempt to restore the growth in profit.
Two officials from the San Jose-based company said that the company is planning to cut about 7,000 jobs by the end of August. The officials asked not to be identified as the plans are not final. The company, however, will provide early-retirement packages to as many as 3,000 workers who took buyouts.
Brian Marshall, an analyst at Gleacher & Co, said that Cisco boss John Chambers is cutting jobs and stopping less profitable business ventures as competitors such as Juniper Networks Inc. and Hewlett-Packard Co. are taking most of the market share in Cisco’s main businesses with products that lower-priced and simple. Sales of Cisco’s switches and routers, which made up more than half of revenue last year, however, will continue to slip.
Cisco is expecting costs of $500 million to $1.1 billion in the fiscal fourth quarter as a result of the voluntary early retirement program, it said in a quarterly filing. Slashing jobs may see the company manage $1 billion in expenses in fiscal 2012.
The officials said that the voluntary retirement packages will include a year’s pay and several medical benefits, and will be offered to about 5,800 employees.
Cisco shares have has dropped 24 percent in 2011.