SAN FRANCISCO — Cisco Systems, the computer-networking giant that is in the midst of a major technological pivot, on Wednesday said it will eliminate up to 5,500 jobs.
The job reduction is Cisco’s second major one in two years. The San Jose, Calif.-based company laid off 6,000 in a restructuring in 2014.
The Silicon Valley company announced the cuts — about 7% of its global workforce — during its fiscal financial earnings report. Sluggish spending by corporations and telecom carriers of network switches and routers, Cisco’s bread-and-butter business, have prompted it to delve into other fields, such as cloud computing and the Internet of Things.
The news sent Cisco shares down 1%, to $30.45, in after-hours trading.
Like fellow tech behemoths Oracle and IBM, Cisco finds itself wrenching toward a shift of business to fledgling markets such as cloud computing and the Internet of things.” And, like them, it has scooped up companies specializing in those technologies: In February, Cisco announced plans to acquire IoT company Jasper Technologies for $1.4 billion.
Intel, another venerable tech giant trying to maneuver an ever-shifting tech climate, in April it would slash up to 12,000 jobs, or 11% of its worldwide workforce.
Cisco’s headcount reduction isn’t “necessarily a negative for Cisco’s share price performance,” analysts for global banking investment firm Jefferies said in a note today, maintaining a “buy” rating on Cisco stock.
“Naturally, any headcount reduction could be viewed as a sign of weakness in business fundamentals,” the note said. “We believe that any headcount reduction at Cisco – at this point – would be driven by their natural re-organization of the business.”
Contributing: Brett Molina.
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