Cisco could be forced to shed 5000 jobs in order to maintain its competitiveness, according to a researcher at a US investment bank.
The cuts would represent seven percent of Cisco’s 73,000 head workforce and would lower its expenses by US$1 billion annually, according to a widely reported research note by Gleacher & Co analyst Brian Marshall.
Cisco intends to shed light “on the cost reductions, including layoffs” in its August 10 earnings call, spokeswoman Karen Tillman told Bloomberg Monday.
In May analysts were expecting Cisco to cut up to 4000 jobs -- its largest cuts since 2002, after the internet bubble burst.
However, unlike previous layoffs, Cisco does not face a collapse in stock valuations, but rather mounting pressure from rivals, such as HP and Juniper Networks, and video-conferencing rivals such as Polycom.
HP today boosted the 2.5 per cent gains it made in Layer 2 and 3 Ethernet switching revenue in the first quarter of 2011 at a time when Cisco’s share fell 5.8 percent.
Additionally, a Cisco merger with storage and virtualisation kingpin EMC could also make sense in order to make the former a more competitive player, according to Marshall.