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Cisco Slashes 4,000 Jobs

Posted by ryuzaki0 on from the and-you're-done dept.

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."

34 of 139 comments (clear)

  1. Expenses and Revenues by Mitreya · · Score: 5, Insightful

    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?

    1. Re:Expenses and Revenues by ranton · · Score: 5, Interesting

      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.

      --
      -- All that is necessary for the triumph of evil is that good men do nothing. -- Edmund Burke
    2. Re: Expenses and Revenues by Anonymous Coward · · Score: 2, Informative

      I think you nailed it right here. I worked for Cisco for a couple years when they started doing layoffs, and it was more a way for them to get rid of bottom performers than anything else. Well, by and large. They did also ax whole projects, but that was a bit more rare. It's hard to get fired from Cisco, so they use the layoffs to get rid of some cruft.

      Also, the layoff package they give you isn't bad at all. They provide job placement services, as well as paying you for quite some time.

    3. Re:Expenses and Revenues by davester666 · · Score: 3, Insightful

      Cut? He needs a bonus for being a visionary, otherwise he'll bolt for another company [of course, after making sure his golden parachute has fully vested, or, even better, he gets the board to agree to just give all of it to him for it's "vested" because "it's the right thing to do for all the hard work he's put in"].

      --
      Sleep your way to a whiter smile...date a dentist!
    4. Re: Expenses and Revenues by RabidReindeer · · Score: 3

      Yeah, innovation. Cutting employees, buying back your own stock, and giving all your cash to stockholders in the form of special dividends all tell investors that you don't know where growth is going to come from: you're out of ideas.

      So, of course the stock is down after this announcement.

      "Our employees are our greatest asset."

      Let's liquidate some assets.

    5. Re:Expenses and Revenues by Spookticus · · Score: 5, Informative

      Uh, John Chambers has been with Cisco since 1991 when he left IBM and has been the CEO of cisco for almost two decades.....Just sayin.

    6. Re:Expenses and Revenues by afidel · · Score: 2

      Nope, this has been SOP at Cisco for well over a decade, they cull the bottom 5% each year, well functioning departments are allowed to make some of their cuts through not filling open positions and other shenanigans but groups that aren't performing will see a real 5-8% reduction in force. Nobody at Cisco will be surprised by this in the slightest. Nobody working on a profitable product line that's doing good work has anything to fear, most of the folks in the wireless division that I worked with 10 years ago are still there.

      --
      There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
  2. Easy come, easy go by mendax · · Score: 5, Interesting

    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.
  3. Hint go back to making good networking kit by silas_moeckel · · Score: 2

    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.
  4. Meanwhile, back at the bean counting dept. by ebno-10db · · Score: 5, Informative

    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.

    1. Re:Meanwhile, back at the bean counting dept. by Mitreya · · Score: 2

      There was a time, believe it or not, when profitable companies would generally not layoff people because the company was, uh, profitable.

      I can only assume that firing is the reason why the company is temporarily profitable. I understand it goes like this:

      1. Notice falling revenues

      2. Fire enough people to compensate by reducing expenses even more

      3. (Show) Profit!

      4. Suffer more revenue loss due to all this missing workforce and go to #1

      Of course after a few cutting rounds, the CEO will be left alone in his office, but that's a long term view which is irrelevant.

    2. Re:Meanwhile, back at the bean counting dept. by Meditato · · Score: 5, Insightful

      I'm one of the technical cofounders of a software startup. I'm often dumbfounded by how shortsighted my business counterparts are. Some of their behavior can be legitimately justified on account of their concern for the company's bottom line- but only some. For example, they have recently tried to outsource app development for the fourth time (that I know of), thinking it was a quick solution. And for the fourth time, it failed. After talking to them and hearing them go on about how it was still cheaper to outsource development work instead of hiring someone, I still don't think they've learned their lesson.

      Their core problem is nothing more and nothing less than the fact that they are "business school" graduates. Because instead of running businesses in a technocratic manner with the intention of selling a good product, we instead need to train a separate class of people to do this nebulous thing called "business", which involves short-term thinking, buzzwords, and a ton of ass-kissing. And it seems that the ultimate purpose of this thing called "business" is just more "business".

    3. Re:Meanwhile, back at the bean counting dept. by ebno-10db · · Score: 5, Insightful

      It's always a pleasure to hear from someone like you.

      Reminds me of a time when I worked for a company that said they didn't have the money for a new project. I thought, how much could the new project cost? 90% is salaries, and they're being paid regardless. I figured I didn't understand the business side well enough. Then I was traveling with the manager of the facility I worked at (who was quite successful in that position). Out of the blue, and without prompting, he said exactly what I'd been thinking. From then on I realized that an awful lot of what seem like idiotic business decisions really are idiotic, and they come from people who don't think clearly. In that case they were wrapped up in an accountant's version of what the project would cost, without realizing they were paying most of the cost anyway!

    4. Re:Meanwhile, back at the bean counting dept. by ebno-10db · · Score: 2

      Ah yes, I can remember those times as if they were a few hours ago - maybe because they were: Cisco to cut 4,000 jobs; stock falls 10%

      The price fell because they didn't hit their earnings expectations, even though earnings were good. The layoffs were just to appease mindless stock analysts by making an offering. If Cisco felt that layoffs would cut their stock price, they wouldn't have done it.

    5. Re:Meanwhile, back at the bean counting dept. by __aaltlg1547 · · Score: 2

      Doesn't apply to Cisco. Their sales are up the last two years and their profits are steady (and large). Chambers is trying to increase profitability.

    6. Re:Meanwhile, back at the bean counting dept. by LordNacho · · Score: 5, Insightful

      Their core problem is nothing more and nothing less than the fact that they are "business school" graduates. Because instead of running businesses in a technocratic manner with the intention of selling a good product, we instead need to train a separate class of people to do this nebulous thing called "business", which involves short-term thinking, buzzwords, and a ton of ass-kissing. And it seems that the ultimate purpose of this thing called "business" is just more "business".

      This encapsulates what's wrong with the world. I actually did a degree called "Engineering, Economics, and Management". The hard bit is the first bit. The bit where you learn stuff that's not trivial is the first bit and parts of the second bit. And the bit where you sit with MBAs and read self-explanatory "cases" that makes everyone think you can "strategize" is the last bit.

      I've run businesses myself, and quite simply if you're on the technical side, you can use common sense to decide what to do. If your business is really big, you might stop doing technical stuff, but the best managers "get it" because they know what they can ask for and what's a realistic way to work.

      And yet I find myself looking at various organisations, both public and private, where the idiots are running the show. There's productive people who are generally technologists (but I don't have a lot of exposure to eg creative business), and there's fools "managing" them. And the fools have degrees too, just in the BS subjects. But those degrees are somehow qualifying people to run pretty large organisations. And they are paid better, because they have a good basis for pretending to create value.

      At one point I thought maybe there really is value in management. After all, you do need someone to motivate the team and make certain decisions. Someone to hold everyone accountable. But actually that someone ought to be someone who could take a place in the team, not some guy who could never be smart enough to do the job himself.

    7. Re:Meanwhile, back at the bean counting dept. by scamper_22 · · Score: 3, Interesting

      I can't help but laugh at this.

      My wife is an accountant and boy does she like to argue about these things. We live in the city and often take the subway, especially on weekends. One day, I mentioned that they should try and do something to get people who would otherwise drive to take the subway. For a network system, once it is up and running, the cost of adding people on it is 0.

      The subway is going to run every 5 minutes whether there are 50 or 100 people on it.

      Man, she jumped on that statement like a pitbull. Took my by surprise, as I just said it in passing. She would not let the idea of a 0 additional cost stand.

      Acknowledged that the system still has be funded... that potentially the paying users are subsidizing others... but my only point was that if you could get someone who would have otherwise driven to take the subway which had excess capacity, the additional cost would be 0.

      She would have none of it.

      I even tried to use the internet example. Once the network is built, it doesn't matter how much people use it (except for transit charges), so pay per GB are a scam. They can control their network for congestion, but beyond that, it is just a scam. She had less trouble with this one, but still fought the idea of 0 additional cost.

      I suspect the same mentality is there for business. In reality, the company is playing employees a salary. They're going to come to work and be there. If you have excess capacity of work (to use such a term), why not use it for something productive. I guess the alternative is to get rid of the excess capacity... but if you don't plan to do that or can't do it (work can't be split up...) then make use of it for 0 additional cost.

      I'm all for knowing about cost and figures and planning...
      But it's almost like they learn a few methods and formula and then think that is all there is to business no matter how much reality differs.

  5. Have any one of you worked there? by Arrogant+Monkey · · Score: 2

    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.

    1. Re:Have any one of you worked there? by ebno-10db · · Score: 5, Insightful

      Is there any reason to believe it's the deadwood that will be laid off? You have a lovely theory, but my experience is that's not what happens at most companies.

    2. Re:Have any one of you worked there? by Arrogant+Monkey · · Score: 3, Insightful

      If the guys I was working with are any indication, you could fire 90% of them and still not get all the deadwood.

    3. Re:Have any one of you worked there? by Arrogant+Monkey · · Score: 2

      Consultant. Best skill is biting my tongue. Seriously though, most of these 4000 are in the valley, which is seeing a tech boom. They have a name brand on their resume. They're in a hot space. Any talent at all is not going to be going hungry.

    4. Re:Have any one of you worked there? by Anonymous Coward · · Score: 5, Interesting

      Large companies like Cisco are usually terrible at identifying dead wood.

      I spent 10 years at Microsoft. By the time they had their first large-scale layoff in Jan 2009, I was already gone but I still had quite a few friends there. The stories I heard would be hilarious if people's livelihoods hadn't been at stake. For example I know of a team where every single individual contributor was let go while the entire management chain was unaffected (and left with no one to manage).

      I was working for another company in the area at the time and we had a lot of the fired MS people come interview with us. Surprisingly most of them were very good. Given our proximity to Redmond we'd always had people from MS interviewing and in the aggregate they were below average. But somehow in the weeks after the layoffs, most interviewees from MS were far better than what we'd been accustomed to. From what I saw I would say that the typical interviewee was an individual contributor with 10+ years experience. Frankly, it boggled the mind. I remember how some of my colleagues were scratching theirr heads. "Why on earth would they let go of all those competent experienced people?" they wondered. Having worked for MS before I understood all too well what had happened. This is a company where "visibility" is easily mistaken for "getting stuff done" and where how fast one climbs the management ladder is as the _only_ metric of success.

      In my experience this is fairly typical of large corporations. They DO have a lot of dead wood, mostly in the form of bloated middle management. But unsurprisingly, those are NOT the people they fire during layoffs. Tell me, has MS become faster and more nimble since firing 5,000 people in 2009?

    5. Re:Have any one of you worked there? by gander666 · · Score: 2

      From what I saw I would say that the typical interviewee was an individual contributor with 10+ years experience. Frankly, it boggled the mind. I remember how some of my colleagues were scratching theirr heads. "Why on earth would they let go of all those competent experienced people?" they wondered.

      See, that is part of the mantra (in HR and management) that people always need to be reaching for the next rung on the ladder (IC->group leader->Supervisor->manager->director etc..) The impression is that someone who has been an individual contributor for 10 years is somehow defective. Even if they are super productive, and happy in their role (which describes me. I made the foray into management, and jumped back at first opportunity).

      A manager once told me that he would fire me if I didn't want to be promoted to director. I thought he was fucking nuts, but he was dead serious. I left shortly thereafter.

      --
      Suppose you were an idiot and suppose you were a member of Congress ... but I repeat myself. - Mark T
  6. More offshoring by randyapenguin · · Score: 2

    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.

  7. Re:its just trimming the fat by randyapenguin · · Score: 2

    Most of these tech companies keep clawing back wages and benefits. I think people would be more willing to improve themselves if they knew that their jobs would be there in the future. You can't keep feeding people bullshit.

  8. Cisco is a very unique company... by tlambert · · Score: 5, Interesting

    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

    1. Re:Cisco is a very unique company... by seoras · · Score: 5, Insightful

      I agree with what you are saying but I think it has more to do with the nature of what Cisco does and it's unique technology that helps it retain acquired employees.
      If you work in R&D of networking equipment you have a very very limited job market place.
      So the options to move on somewhere new, once Cisco has acquired you, are very limited.
      Unless you move into another technology area, which isn't imbedded software and networking devices, that can be a big leap
      I know as I made that leap and it wasn't easy (former Cisco employee 1994-2006).

      The problem Cisco has is that the router has gone from being the building block of an industrial revolution to a mass produce product.
      The router is now a commodity.
      Given the Snowdon revelations about the NSA would you buy USA made networking equipment to carry your data if you were Asian or European?
      That's why Huawei was born.
      The US national security initiatives (or paranoia's) are doing most of the harm to US technology companies global growth.

    2. Re:Cisco is a very unique company... by swalve · · Score: 2

      Far as I know, the NSA revelations were not about back doors in individual products. The NSA isn't going to put back doors into stuff. They are about securing the US's interests, not weakening them.

    3. Re:Cisco is a very unique company... by Anonymous Coward · · Score: 5, Informative

      Then you've not noticed or paid attention to their behavior.

      The NSA encourages backdoors, and unencrypted communications, that make their and other intelligence service's jobs easier directly at the expense of US confidentiality. Take a good look at the history of the "Clipper Chip" and its "Skipjack" technology. As soon as means were discovered to use it with keys that were *not* held in law enforcement hands, it was pulled from the market. Not because this created a security risk, but because it meant the NSA could no longer effortlessly obtain keys to monitor traffic. The prevalence of unannounced backdoors, and irreparable back doors, in large amounts of Cisco equipment has been repeatedly demonstrated.

      The fact that Cisco configuration tools and the AnyConnect VPN clients were written by drunken, outsourced monkeys who were downsized from the "Hamlet" writing project also has its effects. What other VPN client, in the world, is not even capable of saving more than the last VPN configuration you happened to use, saving your passwords, or saving an unsigned SSL key from a corporate site that you yourself selected and have hand verified so that the client will *stop throwing random popups* about it?

    4. Re:Cisco is a very unique company... by gander666 · · Score: 2

      Shit, my moderator points expired yesterday. A-men

      --
      Suppose you were an idiot and suppose you were a member of Congress ... but I repeat myself. - Mark T
  9. Re:increase in bonus? by Anonymous Coward · · Score: 4, Insightful

    Your argument would carry a lot more weight if the executives were let go. But no, management is untouchable. It's always the people who do the actual work that pay the price when those sociopathic assholes get put in charge of companies. They can fuck up royal on their job, tank the company, and still get a generous severance package and another gig at some other place where they can do it all over again.

  10. Cisco is 100% performance driven by jroysdon · · Score: 3, Interesting

    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.

  11. HP never made a backdoor has it..... by cheekyboy · · Score: 2

    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.
  12. Re:increase in bonus? by isorox · · Score: 2

    Your argument would carry a lot more weight if the executives were let go. But no, management is untouchable. It's always the people who do the actual work that pay the price when those sociopathic assholes get put in charge of companies. They can fuck up royal on their job, tank the company, and still get a generous severance package and another gig at some other place where they can do it all over again.

    Shareholders pay the price too. Eventually.