Cisco to cut 6000 jobs as sales decline

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Cisco to cut 6000 jobs as sales decline

Third round of layoffs in as many years.

Cisco plans to cut another 6000 jobs as it prepares to unveil tepid results for its last quarter and works through a transition towards a new cycle of high-end switches and routers.

The latest round of layoffs is at least the third workforce reduction in about as many years for a company once synonymous with the internet boom, but which has lately struggled to sustain growth.

The company announced in August 2013 that it would cut 4000 jobs. And in 2011, it said it planned to reduce its workforce by more than 11,000.

Shares in the company slipped 0.95 percent to US$24.96 (A$26.83) in extended trading, from a US$25.20 close on the Nasdaq.

“The market doesn’t wait for anyone. We are going to lead it, period," CEO John Chambers told analysts on a conference call.

"The ability to do that requires some tough decisions. We will manage our costs aggressively and drive efficiencies.”

Chambers partly blamed the cuts on uncertainty in global demand. In emerging markets, where the company faces sluggish sales and increased competition, Cisco saw continued challenges. China product orders fell 23 percent, and Brazil saw 13 percent declines.

"Unfortunately, as we look out, we don’t see emerging markets growth returning for several quarters and believe it could get worse," said Chambers.

Total product orders rose one percent, with two percent growth in both the Americas and Europe, the Middle East and Africa, offset by a seven percent decline in Asia and Pacific.

Cisco's sales of high-end routers and switches declined seven percent and four 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.

Security revenue was boosted by the acquisition of SourceFire, a cyber security firm Cisco acquired in October 2013.

Cisco also forecast earnings per share of between US$0.51s and US$0.53 for its current, fiscal first quarter. It predicted flat to one percent growth in revenue for the period.

Cisco posted a smaller-than-expected 0.5 percent dip in fiscal fourth-quarter revenue to US$12.4 billion. Wall Street on average had expected US$12.1 billion, according to Thomson Reuters I/B/E/S.

That beat the company's previous guidance for a decline in revenue of between one percent and three percent for the quarter.

Cisco reported a net profit of US$2.8 billion in the fiscal fourth quarter, flat from the year-ago quarter and adjusted earnings of US55 cents per share. That exceeded the consensus forecast of US53 cents.

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