Cisco chief executive John Chambers stated that the company is planning to cut five percent of its workforce – which amounts to about 4,000 employees losing their jobs. Chambers acknowledges the profit jump but stated that it’s not enough to avoid this turn of events.
“What we see is slow steady improvement, but not at the pace we want,” Chambers told analysts on a conference call.
In the quarter that ended last July 27, Cisco reported a profit of $2.27 billion, or 42 cents a share, which is up from the year-earlier figure of $1.92 billion, or 36 cents. Meanwhile, revenues rose to $12.42 billion, up from $11.69 billion.
Much of Cisco’s success came from its data center group, which includes its new business in servers systems, rising by 43 percent. Revenues in its switching equipment also grew, up by five percent, however sales of its routing gear remained flat. The company’s total revenues have risen six percent in the fourth period, and these are expected to rise by about three to five percent for the current quarter.
Despite the positive outlook, Chambers noted that disappointing economic recovery has been affecting product lines in different countries in various ways.
In the Americas, orders have risen by five percent, but at the same time, orders in Asia declined by three percent and six percent in China.
News of the job cuts had a rapid negative impact on the company, as its shares fell 9.5 percent to $23.88 in after-hours trading following the announcement.
The company currently has around 75,000 employees, and is expecting the job cuts to trigger pretax charges of up to $550 million.