Slashdot Mirror
Cisco Slashes 4,000 Jobs
Dawn Kawamoto writes "Cisco's CEO John Chambers dealt employees a blow Wednesday, saying the networking giant would cut 4,000 workers from the payroll. Not quite a death blow, but this 5 percent cut could leave some employees gasping. Chambers took the knife to Cisco last year, cutting 2 percent of its workforce."
Hmm the execs want more money it seems..
The layoffs come as Cisco anticipates a rocky economic environment and seeks to ensure its expenses remain in line with its revenues, said John Chambers, Cisco CEO
Does he not suspect that the revenues may drop as a result of a 5% workforce cut?
Also -- how much of a salary cut is the CEO taking (in those rocky economic times), anyway?
Cisco has been in a kind of layoff mode for quite a while, on and off. I'm a Cisco stock holder and I know that layoffs can raise the stock price in the short term, but in the long term they often are not good. but I think it's time to dump it. I'm getting rather tired of it.
It's really quite a simple choice: Life, Death, or Los Angeles.
Maintaining profit levels, as well as a reallocation of resources to other areas such as security, mobility and the cloud, ... were driving the decision for the layoffs
Additionally, the company will have more agility with smaller teams,
Last summer, Cisco announced it would eliminate 1,300 positions, or 2 percent of its workforce, as part of an ongoing restructuring.
And in March this year, Cisco axed 500 employees, as part of an occasional rejiggering of resources,
beyond their next quarter profits.
All corps are dictatorships and despots, bent on rule of their realm. How this is capitalism escapes me.
Cisco now has one of just about everything in a search for ever increasing profits. They are getting killed in the market technologically there 10ge port densities are horrid.
No sir I dont like it.
FTFA:
For Cisco, the cuts are not a result of the company bleeding tons of red ink. In fact, when it unveiled its fourth quarter results Wednesday, Chambers noted the company posted a record quarter for revenues and its bottom line was profitable.
A history lesson from an old fogey. There was a time, believe it or not, when profitable companies would generally not layoff people because the company was, uh, profitable. If a company did layoff people the stock market usually took it as an indication that something was wrong (which it generally was). No, I swear this is true.
I also know that there are ways of twisting arms to change such behavior, but that only meant something back when the government gave a damn about employment. It typically went something like this. Gosh Cisco, we buy a lot of equipment from you, but there have been some questions lately. Frankly we may need to take another look at the competition. BTW, sorry about your layoffs. No, no, no relation between these two things. BTW, did you know your competition was hiring?
Furthermore, if Cisco does need more people in the future, they'll be the first to scream "shortage, we need 10x more H-1B's!". There was a time when profitable, or even temporarily mildly unprofitable companies, wouldn't layoff people because they'd need their expertise in the future. How silly management was back then, and how wonderful our brave new world is.
Having come in for some consulting with them, like most firms they could cut > 10% and not feel it, because any large firm ends up with a high amount of cruft. The trick is figuring out who the cruft is (hint, if you have more than 1 PM per project, look there) and who is actually effective.
Companies, especially those that are public, answer to shareholders. Shareholders want a return on their investment, as anyone would. It is the CEO's job to do that, however he has to. As for a CEO's salary, that is between the stockholders, and the board. Sadly, there are too few CEO's that would feel the pain, along with the rank and file, but, it's no ones business but the stockholders and the board. Also, with the looming "obamacare" look for many more layoffs, and reduction in hours as more and more employees are being shifted from a full time 40 hour week, to a part time 29 hour week. In a strange way, decades from now, perhaps we can get away from the employer provided health care, and put the responsibility back onto the employee to look after their own health care. Health care, paid by employers, started during WW2, as a way of keeping good employees during WW2, while most were off at the war. The employee became less and less aware of the cost of health care, because, all they were responsible for was "a copay". When perceived cost isn't a problem, you watch prices rise. Then, PPO's MMO's and the like, cut down competition because you are "locked" into a particular group or plan, taking away choice as which doctors you can see. Then, add the technology and so called non profit aspect of a lot of hospitals, and they end up over spending on things they really don't need. We have 2 big hospitals in my city. The city population is around 200,000, with a coverage area population of around 500,000. There use to be a thing called "certificate of need" that was required before they could add something, but it must have been repealed, or just ignored. It's like watching two kids. One gets a toy, the other gets a newer toy to shove in the face of the other. 25 years ago, one got a helicopter, then the other did, but a little more fancy one, so the other one got 2, so the other got 2 also. Then one completely built a new ER, so the other built a new one even bigger! It's nuts! I know several nurses over the years, working on office equipment at these hospitals. Some departments can get new machines any time they want, and other departments have to beg. I asked one nurse why and she said that some departments "make too much money", so they set other departments up, to help the low pay/no pay and they are set up to LOSE money, all to show their no profit status. Why is an "aspirin" 10 dollars or more on your bill? To help make up the write off for the homeless person that comes to the ER with a medicade card, that the government doesn't pay as much for, to make up the difference. Then, you add up all the tests they seem to put you through. Say an EKG shows a slight problem with your heart rhythm. See you in a week while they run 3,942 tests. Why? Because if they don't, and some 1 in a million event happens, here comes the "if you've ever been injured, you may be entitled for compensation" lawyers. So, when you add it all up, why would anyone want to be in business? Between the regulations, red tape, health care nightmare, stockholder issues, lazy employees or those that only will do a job for 20/hr with NO SKILLS, I'm surprised all jobs haven't moved to Asia.
I love how people always jump on the doom and gloom bandwagon when a company announces layoffs.
I don't think layoffs are always a bad thing. In fact I reckon its good for businesses, especially the really large ones.
I've worked in teams where members have been in the same position for 5 years, maybe even more than a decade. They get complacent, they lose their drive and ambition, and they have no desire to go above and beyond in their job. They rock in exactly at 8:30 and leave right on the dot. they haven't bothered upgrading their certifications or even getting certifications full stop and they dont care about keeping up to date with whats happening in their industry.
I've also experienced cases where a company will go through a huge hiring phase because of a big project that the company is pumped about. Hiring managers have almost unfetted access to hire at will, and they do.
years down the track the project is either launched or flopped but regardless its pretty much BAU now, everything has settled down. And now you got a whole bunch of people doing the work that really could be comfortably done by a fraction of those people.
So trim the fat I say.
If things keep going this way. Instead of a bunch of fruit pickers and lawn workers being the only cheap labor jobs, were gonna have previously white collar guys and gals working for pennies on the dollar doing ASA configs. I can see us now, all lined up outside of BestBuy
These days, this applies to most any technology company. The company can't afford the wages paid to Murican' workers, If they can't import em, lay em off and move the jobs to a low wage country. No need to wonder why Murica is languishing? The shareholders don't want or have to pay fair wages.
Geesh, with all these cuts in jobs, now what was that deal that was cut for more corporate jobs? Oh yeah, it was tax breaks. Time to hit DOE based elite corps, like BIG OIL that have been boasting of record profits. But that's just a dream, it'll never happen, and when the US dollar has be sufficiently mashed into the ground, they'll move to another currency and country and hit fracking twice as hard in the US.
Well, TFA says that revenues have been going up while the last couple years of layoffs have been going on (about 8k firings in 2011 & 20012). And they are cutting sales people in addition to engineers, so not all cuts are necessarily ones that would only improve the short term at expense of long term growth.
Since they have been able to increase revenues (not just profit) while cutting significant number of sales personnel it looks like their current cuts worked out for the best. Sometimes a company's needs change to a point where their labor needs change. Maybe management noticed some areas where they were being excessive and trimmed their costs.
Actually, most of the previous cuts were in their appliance services-in-a-box division, and the majority were sales persons, although for the appliance, there were engineering and other staff cuts. The other cuts were in other divisions that were pure services plays, and were mostly sales staff, since once that stuff is written, it needs minor maintenance. The last large cuts were in the Collaboration division (appliance, mostly the remote support people who remotely control the customer's machine to help them out), and the WAAS - Web services.
My understanding is that there were a number of companies, predominantly in India and Pakistan, that would use the Cisco solutions and call up customers claiming to be Microsoft support people calling to help the person out with the malware on their computer. Then they would proceed to install malware after getting you to open things up. The jobs became redundant when a Microsoft intrinsic firewall update to Windows caused the product to quit working.
--
One thing you have to realize about Cisco, is that they are a very unique company. It's not so much that they are innovative, but that they acquire other companies that have innovated. And they are seriously bad-ass good at acquisition and integration of other companies. In fact, they are the #1 company at it, by some metrics.
The important metric in this case is post-acquisition attrition from the acquired company. I worked at a startup which was acquired by IBM. We all, across the board, got an immediate 25% "pay for stay" bonus for agreeing to stick around for 6 months. I know this because we had a company-wdie meeting where IBM HR announced it. The attrition in the first 6 months, where people left 1/4 of their salary on the table and went elsewhere? 25%. The second six months, there was an addition pay-for-stay for 6 months; this round didn't include everyone. Those of us who got it, got a 40%-60% of their salary bonus for agreeing to stay another 6 months (we talked amongst ourselves). The attrition rate over the next 6 months was another 20%. That's a grand total of 45% attrition in the first year, with people being offered 1.65-1.85 times their previous salary.
Other companies do better at integrating acquisitions than IBM, which is pretty piss-poor at it (one issue: they immediately replace support and HR staff as redundant, and you end up having to go to someone you never met with personal leave and insurance and other HR problems). When McAfee acquires a company, expect around a 25% attrition in the first year. Apple, when it acquired PA Semi and switched their chip guys from designing G5 class Power Architecture chips that were about 5 times as energy efficient as IBM was able to build, to ARM - lost about 15% off the bat; this was highly publicized, since they went to Google. No idea what they lost after that, only that it was non-zero.
What is Cisco's average attrition rate after one year for an acquired company? Much better... 15%? Lower. 10%? Lower. 5%? No... it's 2%. Depending on who you acquired and how big they were, this could be 4 friends dying in a boating accident up at Tahoe.
So after a while, Cisco needs to force attrition. It tries to get rid of people it doesn't actually need, and a lot of time, it's not engineering types, it's sales types, or HR or su
Not sure if thats the case here, but often as large companies grown they end up with two divisions doing the same thing or products that are end of life. If one division made another redundant or is no longer generating revenue (and has no prospects for new revenue) you can expect it to be cut. It is just the natural cycle of things. I don't know if thats the case here though.
How long until some C-level stuffed suit at Cisco complains about "lack of employee loyalty"?
Cisco's a day spay with too much support, support positions. They should have gone for 15%
probably netted him a huge bonus, equal to 10 years or so compensation plus benefits of the 4000 heads he cut. Bravo!
They've been enjoying their near monopoly for some time now. They've gotten bloated & stupid just like american auto manufacturers in the 60s & 70s.
And here comes a wave of cheap foreign imports. But do you think cisco will get multiple bailouts & welfare like the auto companies?
Cisco is 100% performance driven. I wonder how much of this is just a variation of rank-based employment evaluation?
Are they just trying to keep things lean and mean? If you don't churn the bottom performers, people get lazy. Cutting 10% might catch some hard workers going through hard times (family, health issues). Cutting just the bottom 5% allows for a bit of grace, and should inspire the 6-10% to step it up. Especially if they are given their rankings, and know how close to the bottom they are - but I don't know what Cisco does there, only speculating.
I'm searching to find a meaning to this argument, but I keep getting caught in Idontgiveashitistan.
This sig is not paradoxical or ironic.
Cisco will likely be foolish and cut heavily from the west. Yet, China is about to block all of their equipment.
If cisco had a brain, they would start bringing back manufacturing to the west, esp. America, and pushing the fact that they are NOT made in China anymore.
I prefer the "u" in honour as it seems to be missing these days.
I have interviewed a lot of Cisco software engineer employees when I worked for one of their competitors. I couldn't believe how little knowledge most of them had about basic networking. I would ask them to describe what happens when one computer on one subnet pings a computer on a different subnet. Most of them had no clue what happened. Or I'd ask them what the difference is between bridging and routing, again no clue.
Granted these were not high level positions, but if you're writing software for a networking company for network related products you should at least have a basic understanding of things like ARP, Ethernet, bridging and TCP/IP.
This post is encrypted twice with ROT-13. Documenting or attempting to crack this encryption is illegal.
Cisco folks realized a few years back that in order to keep growing they would need to get expand their business beyond routing and switching; the so called adjacencies.
Unfortunately for them the plan didn't work. Instead of gaining market share in those areas the started losing market share on their core business.
With the plan failed and Cisco just left doing business in an area that is quickly being commoditized there is no other way to keep the stockholders happy other than cutting costs.
This is the cycle of life and business. And IMHO there is no other way, there is only one earth and only so many people so there are hard limits up to which point a company can grow.
After all, the reason why Cisco pays so much for the CEO is because they're in charge of such a big company, right? And now it's at least 7% smaller. So they need 7% fewer managers and those people they need at least a whole one of (some could take part time and the pay cut) like the CEO are not in charge of such a big company any more, therefore they should be paid less by the same differential (which was much more than 1:1).
Either that or admit the excuse for executive pay was bullshit.
They are still hiring like gangbusters in China, India, and the Czech Republic (where they maintain IOS now - cheap coders).
Cisco's payroll in India has increased to almost 11,000 heads in the last couple of years, and Cisco considers Bangalore to be its "Global Center of Excellence."
I used to keep a list of these purges to look at when I saw articles saying we needed more technology workers because there was a shortage, but it got to the point where there were too many purges to keep track of.
http://gadgets.ndtv.com/others/news/hp-acknowledges-the-presence-of-a-backdoor-in-its-storage-products-391370
Dont you read?
Liberty freedom are no1, not dicks in suits.
Why is Cisco having issues? Competition, or simple market saturation?
---- Booth was a patriot ----
Cisco lays off about 5% of its workforce every year. They have always done this. It is the corporate culture. 5%ers are generally people that are there for a year to get Cisco on their resume and then they are off to someplace else. A decent percentage of new hires only last one year. They simply aren't re-hired after their probationary period. So if you are constantly hiring 5% and you lose 3% every year to this process, they are only laying off 2% of their poor performers.
They announce these layoffs every year to get a little jump on the stock price from people that thing they are streamlining.
Nothing is more impressive than the Cisco calls during a router roll out, When our engineers are stuck.
Like a moon landing in cyberspace.
To quote from the article, "Cisco posted fourth quarter revenue of $12.4 billion, up 6 percent from a year ago. And its net profit reached $2.27 billion for the quarter, an increase from $1.92 billion a year earlier.
However, Ciscoâ(TM)s forecast for the current quarter was less than what Wall Street had hoped for, and despite the cost-cutting moves it announced, investors punished the stock in after-hours trading."
So, the "analysts" were wrong, and are punishing Cisco in the Ponzi Scheme of the market, and the CEO is following their lead.
Lessee, to quote a news story from the nineties, "CEO will downsize until Wall St. stops rewarding their stock options".
Who cares about the actual company, its employees, or customers?
mark "first we shoot all the MBAs"
This is a fascinating thread.
Cisco lost its vision as a company at least a decade ago. They are making most of the mistakes made by large companies with no business vision beyond meeting their financial projections. As a consequence, Cisco is slowly shrinking -- think General Motors in 2004 or so. In a few years, a larger company (maybe Chinese or Indian) will buy what's left of them.
I once met with a group of about a dozen Engineers -- all of them were excellent professional people. Their group had lost three supervisors in fifteen months and been transferred through two departments. Every one of them was concerned about their evaluation status -- they had had no real chance to contribute to Cisco in about eighteen months, and it did not have anything to do with their ability to perform. Each of these people knew he/she was going to hit the bottom of any layoff list that Cisco HR kept, because they had simply not been given anything productive to do for two years. This is what happens to good professional employees when a large company loses its vision, and it doesn't happen to just one small group: It will usually happen to hundreds of mismanaged professional and support groups at a time, all through a large company.
I am NOT convinced that this article is accurate. I don't think that Cisco has 80,000 domestic employees any more. Three years ago, they had two thirds of that number, and there have been layoffs since. Cisco also employs several times as many employees in India and China, as they employ here. Does this announced layoff also affect their overseas staff?
Cisco also relies on thousands of temporary employees to manage their workload. Are they going to send all their temporary employees home, before laying off, well; whomever they intend to layoff? If so, their layoff will be well over 10% of their workforce; not 5% -- and these percentages double if their domestic employee staff numbers only 50,000 or so.
4000 unproductive people?
Or is this just another 4000 people to go over the next 25 years taking into account the usual number of people who leave over 25 years if you don't hire anyone else?