Cisco Systems (
CSCO +0.20%) is cutting 6,000 jobs, or 8 percent of its workforce, as it faces weakness in emerging markets and a slump in demand from telecommunications-service providers.
The world's largest networking-equipment maker had about 75,000 staff at the end of July. Including the latest round, Cisco has eliminated more than 18,000 employees over the past three years.
John Chambers, who is nearing retirement after almost two decades as Cisco's chief executive officer, has been grappling with slowing growth for its market-leading routers and switches. Phone carriers and other large companies are replacing legacy network hardware with software that performs many of the same tasks.
"It's a transition that's inexorable, and it really puts the pressure on Cisco," said Alex Henderson, an analyst at Needham & Co., who has a hold rating on Cisco's stock.
Sales in the current fiscal quarter through October will be $12.1 billion to $12.2 billion, based on the company's forecast for revenue to remain flat or rise 1 percent.
The shares of San Jose, California-based Cisco fell in extended trading. The stock advanced less than 1 percent to $25.20 at the close in New York, leaving it up 12 percent this year, compared with a gain of 5.3 percent in the
Standard & Poor's 500 Index (
$INX +0.67%).
Market shift
Revenue in the period that ended July 26 was $12.4 billion, the company said in a statement today. That beat the average analyst estimate for $12.2 billion, according to data compiled by
Bloomberg. Profit, excluding some items, was 55 cents a share, versus a projection for 53 cents.
Net income in the fourth quarter fell to $2.25 billion, or 43 cents a share, from $2.27 billion, or 42 cents, a year earlier.
Cisco faces a challenging shift as customers move from buying hundreds or thousands of proprietary machines with gross margins of 60 percent or more to software-defined networks that can run more efficiently on cheaper gear. The trend has been embraced by companies including
Google Inc. and Facebook Inc.
For the year, Cisco's sales fell 3 percent to $47.1 billion, the first decline since 2009.
Cisco has exited consumer businesses, cut staff and restructured its management in the past three years. The company has come under increased pressure from rivals including
Huawei Technologies Co. and
Arista Networks (
ANET -1.79%) in its main businesses, while newer competitors such as
Palo Alto Networks (
PANW +4.34%) and
FireEye take share in growing markets such as computer and network security.
