Cisco Systems, friend to the tech world, and the fifth largest (by revenue) corporation in Silicon Valley, continues to experience difficult times as it once again announces a round of layoffs.
The company says that 6,000 employees will get the sack, which equates to about eight percent of its workforce. Cisco has already cast adrift 25,000 jobs over the previous five years.
The odd part is that despite the clockwork rounds of layoffs, Cisco actually now has more employees than it did at the beginning of its layoff series. That probably is not much comfort to the workers that are being asked to depart, who might understandably wonder, "Why me?" The company also continues to invest in acquisitions, five in fiscal 2014 alone.
The reason for the employment shell game is due largely to a rapidly shifting marketplace. The goalposts keep moving on where Cisco needs personnel, and what skills are subsequently needed to compete in both legacy markets that are encountering tidal changes in conditions, and in emerging markets where new skill sets are frequently required to keep Cisco in the game.
Cisco is a big company, and big companies cannot turn on a dime in an era in which market conditions are written in chalk, not stone. Cisco is trying to revamp its business around cloud-based systems, and is finding that even newcomers to that market are formidable competitors.
In Cisco's big equipment, proprietary software network and communications business, in which they once held a dominant and highly profitable position, the switch to commodity hardware operating via third party software solutions has forced them to scramble to retain market share. In short, Cisco Systems is faced with the old story; the times, they are a' changin'.
Compounding matters is the release of a fourth fiscal quarter earnings report that did not wow anybody. Quarterly revenue turned up flat year-over-year, year-end revenue shrank by three percent; cash flow dropped from $4.0 billion in Q4 2013 to $3.6 billion in Q4 2014. Still, earnings did exceed Wall Street expectations. After the release of the report, though, the company's stock price remained flat.
In a conference call, Cisco CEO John Chambers said, "We'll do limited restructuring across several areas of our business," as a means of explaining the cuts. "We are making these tough choices so the company can transform itself and grow more quickly," he added.
By way of keeping up with the Dow Joneses, Cisco is venturing into consulting, software, cyber security solutions and things for the Internet of Things.
