Cisco reports its fourth quarter earnings on Wednesday, and rumours have begun circulating that another round of layoffs are coming, maybe announced next week, maybe in October.
We can’t confirm those rumours, which stem from an anonymous source who tipped off Cisco blogger Brad Reese. But a source did tell us that Cisco is working on a reorganization of some of its engineering teams.
Reese broke the news on last year’s surprise layoffs which also came from an anonymous tip.
Last August, Cisco shocked the world by reporting a better-than-expected quarter, and a solid year, and that it was still cutting 4,000 jobs, almost 5% of its workforce. About 900 people got pink slips at the San Jose mothership offices the following October, the Silicon Valley Business Journal reported.
So the current crop of rumours could simply be from nervous employees who fear that the same thing will happen again this year.
Cisco has declined to comment, but this is what we do know: The company has been reorganising some engineering teams, according to a senior executive who told us that his unit “announced a reorganization and as a result of that, the role that I have been playing today is essentially going away.”
We also know that Cisco CEO John Chambers would like to refresh his employee base at a faster rate than currently happens.
Chambers told us in an interview last month, “A well-run organisation turns over 10% of their organisations, including senior leadership. I don’t have the heart to do that. But we need to run at 3% to 5% in voluntary attrition. We need to do that a little better — we run at 3%.”
Cisco has a history of announcing job cuts in the summer, around the time its fiscal year ends. In addition to the 4,000 jobs cut announced in August 2013, Cisco cut 2% of its workforce in July 2012. Routine layoffs have been going on since 2011, when the company launched a program called “the Accelerated Cisco Transformation Program (ACT),” run by Senior Vice President Angel Mendez.
All told, between 2011 and 2013, Cisco cut 12,000 jobs.
Last year, a former employee told us “Cisco’s standard is to give people two to four weeks to find another Cisco job and then lay them off … They do a good job of making sure there aren’t that many job openings so most people leave.”
The layoff rumours could also be coming from rather meager growth expectations for Cisco’s year. Analysts expect Cisco to report $US46.96 billion in revenues, down 3.40% from 2013, when it reported $US48.61 billion, according to Yahoo Finance. Earnings-per-share profit is expected to come in at $US2.04, compared to the year-ago $US2.02. Growing when revenue lags requires cutting costs and that often means trimming the workforce.
So, while we don’t know for sure that another round of layoffs are coming, it wouldn’t be entirely surprising if more Cisco workers got pink slips.
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