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Thursday, 14 August 2014 11:09

Cisco still in trouble

Written by Nick Farrell



Cuts 6,000 jobs

Industry bellwether Cicso is still in trouble and forecast tepid current-quarter results and announced plans to cut another 6,000 jobs. The company said that it was working through a transition toward a new cycle of high-end switches and routers.

However this is the third workforce reduction in about as many years for a company once synonymous with the Internet boom. The company announced in August 2013 that it would cut 4,000 jobs. And in 2011, it said it planned to reduce its workforce by more than 11,000.

Chief Executive Officer John Chambers told analysts on a conference call that to lead the market Cisco needs to make tough decisions, manage its costs and drive efficiencies. He said the cuts on the uncertainty in global demand and the fact that emerging markets, where the company faces sluggish sales and increased competition. China orders fell 23 percent, and Brazil had 13 percent declines.

"Emerging markets are not likely to grow for several quarters and believe it could get worse," said Chambers.

Total product orders rose 1 percent, with 2 percent growth in both the Americas and Europe, the Middle East and Africa, offset by a 7 percent decline in Asia and Pacific. Cisco's high-end routers and switches sales declined 7 percent and 4 percent year-over-year, respectively, as customers were slow to order a new series of products. Its data centre revenues rose 30 percent, and security sector revenues rose 29 percent.

The one ray of sunshine was the that security revenue was boosted by the acquisition of SourceFire, a cyber security firm Cisco bought in October 2013.

Cisco reported a net profit of $2.8 billion in the fiscal fourth quarter, flat from the year-ago quarter but better than Wall Street expected.

Nick Farrell

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