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Cisco may cut up to 10,000 jobs

Bloomberg News / July 12, 2011

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Cisco Systems Inc., the largest maker of networking equipment, may cut as many as 10,000 jobs, or about 14 percent of its workforce, to revive profit growth, according to two people familiar with the plans.

The cuts include as many as 7,000 jobs that would be eliminated by the end of August, said the people, who asked not to be identified because the plans aren’t final. Cisco, based in San Jose, Calif., is also providing early-retirement packages to about 3,000 workers who took buyouts, the people said.

Cisco chief executive John Chambers is slashing jobs and exiting less profitable businesses as competitors such as Juniper Networks Inc. and Hewlett-Packard Co. take market share in Cisco’s main businesses with lower-priced, simpler products. Sales of Cisco’s switches and routers, which made up more than half of revenue last year, will continue to slip, said Brian Marshall, an analyst at Gleacher & Co.

Eliminating jobs will help Cisco wring $1 billion in expenses in fiscal 2012, the company said in May. Cisco expects 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.

“We will provide additional detail on the cost reductions, including layoffs, on our next earnings call,’’ Karen Tillman, a spokeswoman for Cisco, said in reference to an earnings call scheduled for early August. She declined to discuss job cut figures.

The voluntary retirement packages included one year’s pay and medical benefits, and were offered to about 5,800 employees, two people said.

Cisco shares fell 31 cents, or 2 percent, to $15.43 in trading on the Nasdaq Stock Market. The stock has dropped 24 percent this year.