Cisco Systems overnight shed 11,500 jobs from its payroll, between layoffs and a move to sell a plant to Foxconn.
The company had been expected to cut between 5000 and 10,000 jobs, but wound up laying off or potentially transferring a total of 11,500 workers.
According to Cisco, the workforce cuts break down like this:
- 6500 job cuts, including 2100 employees who took early retirement.
- Of that sum, 15 per cent of vice president and above employees were cut.
- 9 per cent of Cisco's workforce was hit, but that excludes the sale to Foxconn.
- Employees will be notified in the first week of August.
As a result, Cisco will take charges of US$1.3 billion in upcoming quarters. The first instalment of that charge, US$750 million, will be recognised in the fourth quarter.
The sale to Foxconn rids Cisco of a set-top box manufacturing facility in Juarez, Mexico. Cisco had 5000 workers there who will be transferred to Foxconn. Cisco said that no layoffs are expected.
Cisco attributes the reasoning behind the sale as "another step in Cisco's efforts to streamline operations, and supports Foxconn's commitment to co-locate with customers, in order to better meet their end-market needs."
Financial details of the transaction have not been disclosed yet, but the deal is expected to close by this October.
Given several recent reports about Cisco's slump, and efforts to revive profit growth, this news doesn't come as much of a surprise.
The Juarez facility, which is dedicated to building video and telecommunications equipment for the service provider market, retains roughly 5000 employees. Thus, if this is what Cisco was planning in terms of job cuts, it means that these jobs could just be transferred over to Foxconn as it assumes control of this location.
Foxconn already has around 200,000 employees worldwide, with operations based in both North and South America, as well as in Europe and Asia.
Via ZDNet US