Cisco To Slash Up To 6,000 Jobs -- 8% of Its Workforce -- In "Reorganization"

alphadogg (971356) writes Cisco Systems will cut as many as 6,000 jobs over the next 12 months, saying it needs to shift resources to growing businesses such as cloud, software and security. The move will be a reorganization rather than a net reduction, the company said. It needs to cut jobs because the product categories where it sees the strongest growth, such as security, require special skills, so it needs to make room for workers in those areas, it said. 'If we don't have the courage to change, if we don't lead the change, we will be left behind,' Chairman and CEO John Chambers said on a conference call.

Comments

While Buying Back $1.5 Billion In Stock

[BradMajors]

http://www.zerohedge.com/news/...

Re:While Buying Back $1.5 Billion In Stock

[luis_a_espinal]

http://www.zerohedge.com/news/...

One cannot blame Cisco since, like any company, it will operate at the margin of the law irrespective of the consequences to the national economy. A country's economy is an national strategic asset not a free-for-all playground. Hell, this concept is not anathema to reasonable interpretations of capitalism. A balance must exist between allowing companies to flourish without falling in cannibalism (stakeholder capitalism vs shareholder capitalism kinda thing.)

That balance is lost in this country. Or perhaps it never had it but it was never a problem until globalization and other factors kicked in.

Regardless, this is another reason to tax capital gains the same (or as close) as income. This buy-back (on top of the layoffs) is pretty much a swap from income gains to capital gains which are taxed more favorably.

Or better yet, this is another reason to revamp our entire tax system : close all loopholes (including offshoring ones), lower tax brackets (both capital and income) while broadening the tax base and/or implement a value-added tax, eliminate double taxation, don't penalize companies from moving capital and operations abroad, BUT instead create incentives for *all* companies (national and foreign) to invest locally.

This Cisco thing is just a symptom of a greater malady.

Re:While Buying Back $1.5 Billion In Stock

[udachny]

Like I said, companies are borrowing in the USA from money supply inflated by the Fed using their foreign reserves that companies earned and are holding abroad as collateral in order to consolidate ownership and try and beat inflation. The money is borrowed at very low rate of interest due to money not coming from any savings but being brought into existance with Jannet Yellen's magic touch. This is absolutely rational behavior, since the Fed wants to inflate asset bubbles and provides existing large companies with the cash to do it, people do it.

Of-course this misallocation of resources is destroying the dollar, preventing people from making any interest on savings and inflating savings away, which is why senior citizens are working again, in this economy those who want to work are laid off and those who want to retire cannot.

Re:While Buying Back $1.5 Billion In Stock

[AmiMoJo]

One cannot blame Cisco since, like any company, it will operate at the margin of the law irrespective of the consequences to the national economy.

To be fair, the country screwed them. The NSA's spying has cost Cisco a lot of money. I expect they will try to move more jobs and manufacturing overseas soon.

Re:While Buying Back $1.5 Billion In Stock

[aralin]

... so is the value-added tax or sales tax, which hits poor and middle class disproportionately to the percent of income taxed.

Re:While Buying Back $1.5 Billion In Stock

[bjdevil66]

Yes, the rich should be paying more back into the economy (through taxes or spending) instead of hoarding wealth, and the H-1Bs and other outsourcing of costs has to be curtailed.

However, when the poor stop getting earned income credits totaling in the several thousands every year (which goes up with the number of children claimed as dependents), while they don't pay a penny in income tax because they're unemployed for whatever reason, then you'll have a solid argument. Until then, too many of the "poor" are getting a free ride on the backs of bad government policy - and they have no skin in the game. Maybe they need to get rid of their iPhones, stop buying $250 Nikes, and cut their cable to pay some taxes back into the system that's paying for those luxuries.

Re:While Buying Back $1.5 Billion In Stock

[mlts]

Cisco isn't perfect, but I wouldn't be surprised to see their stock remain strong. IPv6 rollouts, security issues, and future IPv6 items [1] will ensure that existing customers will be buying new equipment.

Cisco also benefits from the fact that fiber channel is getting tossed for FCoE. With FCoE or iSCSI, it just takes one fabric to handle both storage and networking, while FC requires a separate switching network to handle zoning and I/O. With 40gigE around the corner, fiber channel is going to be left in the dust until faster HBAs come in 2016.

Would I consider Cisco stock a "buy"? I'm not going to give investment advice, but I wouldn't consider their stock tanking anytime soon. They are the biggest player in a core industry that isn't going away anytime soon.

[1]: IPv6, while getting deployed, still has yet to go through the real-world torture testing the IPv4 stack went through back in the late 1990s with land, teardrop, ping of death, smurf, and other packet based attacks which would drop machines.

Re:While Buying Back $1.5 Billion In Stock

[anmre]

Oh yea - keep on blaming the poor for being poor! Have you ever lived paycheck-to-paycheck? If not then count your lucky-ducky stars because you are in the minority of Americans (assuming that you live in the US).

when the poor stop getting earned income credits totaling in the several thousands every year

You're thinking about this in the wrong way. Social safety nets are not about altruism, or even making it easy for the poor to get subsidies (it's not). When poor people lose their jobs, they lose their homes and end up on the streets. When large swaths of the population are homeless, you end up with filthy slums where basic necessities are rare and diseases flourish. Walls, police and even social ostracism may be able to keep undesirable people out of your pristine life, but they won't prevent diseases from spreading from poor communities to the rich who've managed to deny them even a damn toilet to shit in.

Keeping the poor from becoming that poor is a necessity for any civilization. Subsidies for the poor do far more for the common good than tax breaks for the rich.

Re:While Buying Back $1.5 Billion In Stock

[RabidReindeer]

Yes, the rich should be paying more back into the economy (through taxes or spending) instead of hoarding wealth, and the H-1Bs and other outsourcing of costs has to be curtailed.

However, when the poor stop getting earned income credits totaling in the several thousands every year (which goes up with the number of children claimed as dependents), while they don't pay a penny in income tax because they're unemployed for whatever reason, then you'll have a solid argument. Until then, too many of the "poor" are getting a free ride on the backs of bad government policy - and they have no skin in the game. Maybe they need to get rid of their iPhones, stop buying $250 Nikes, and cut their cable to pay some taxes back into the system that's paying for those luxuries.

This is a very emotionally appealing "solution". But notice that these "freeloading poor" are contributing to the economy by buying iPhones, $250 Nikes, and cable. Keeping money in circulation and creating jobs.

On the other hand, how many iPhones, numerically speaking, are 1% of the population going to be buying? How many pairs of Nikes? Probably more that any single poor person, but there are so many poor people. Companies like Cartier may be able to prosper serving only the wealthy, but Apple didn't get to be the behemoth it is by selling solely to the well-to-do, even at Apple's notoriously high prices.

We more or less respect the "idle rich" whose money comes not from working, but from investments, whether direct or inherited.

Maybe we can spare a little love for the "idle poor" as well.

Re:While Buying Back $1.5 Billion In Stock

[tomhath]

One doesn't really have anything to do with the other.

Those 6,000 jobs aren't in the company's future plans. It would suck to be one of the employees being terminated, but there's no more reason for them to be on the payroll than for Cisco to go out and hire 6,000 buggy whip makers.

As far as buying back the stock, that's a separate decision that probably makes a sense for the company's future. I don't know or care since I don't pay any attention to Cisco.

Re:While Buying Back $1.5 Billion In Stock

[haruchai]

What makes you think they don't have "skin in the game"? A huge number of people below the poverty line have jobs, which means they pay payroll taxes.

Re:While Buying Back $1.5 Billion In Stock

[penguinoid]

Uhh... it was the criminal Showden who screwed them if that's the route [r] you're gonna take

Yes, because the criminal is the one who points out that a crime has occurred and most definitely not the one that did it. Let me guess, you also propose jailing anyone who calls the police to report a crime.

Re:While Buying Back $1.5 Billion In Stock

[rogoshen1]

Why does someone gaming the system and getting a fancy phone, or a new wardrobe etc draw substantially more ire from those with right/libertarian leanings, than something like the f-35 program?

I wonder what has more of an effect on the economy, lots of people cheating the system for small handouts (IE, the money is spent on useless consumer goods) OR a few large firms (raytheon, boeing, et al) bilking billions of dollars on useless weapons systems that may or may not ever be delivered, let alone needed.

In other words; Shanequia with her 5 kids, WIC, and an iphone vs Mr. Defense Contractor living in a McMansion driving an Audi.. Which is actually more of a parasite to the middle class?

A complaint

[DaMattster]

From the article: “If we don’t have the courage to change, if we don’t lead the change, we will be left behind,” Chairman and CEO John Chambers said on a conference call. In reality, Cisco doesn't have courage at all. If they had courage, they would work to retrain a capable workforce and buck an ever growing trend in employment. By laying off 6,000 people, they are showing cowardice and a lack of confidence in their existing workforce. They would sooner send 6,000 people to the unemployment line then work work with a known, reliable quantity. The move is shortsighted because it costs money to hire someone and the new person must then learn the culture, infrastructure, and the business. Add to it the potential for the starting salary to be higher and any positives from the "courage to change" are negated. Bravo on another epic failure of the corporate world. I would have had more respect for honesty and integrity.

Re:A complaint

[geek]

The move is shortsighted because it costs money to hire someone and the new person must then learn the culture, infrastructure, and the business.

No they'll just hire some idiot Indian slave labor and offshore them. Cisco's been at this for over 10 years.

Re:A complaint

[Anonymous Coward]

ob disc: I work at cisco.

cisco has extremes in terms of talent. some really bad idiots work here (and many products show ugly warts and horrible design, including poor docs) and yet there are some really amazingly smart people here, too.

hiring has clearly been 'hire the cheapest foreign workers we can find'. you can walk the hallways and not hear any english (I'm talking about san jose buildings, here). for an 'american' company, its shameful. clearly, they don't hire the best and brightest, overall; they follow the silly valley standard of cheap h1b's for the most part.

tech support (internal) is the worst I've ever seen. wait times on phones for int support is 15 minutes, min; and you get someone who has such a thick accent, you can't understand them. they can't do much, they waste a lot of time asking dumb questions and it takes forever to get anything done.

cisco should strip more than 10% of its workforce, but I know the reality: they'll strip the higher waged folks and keep the crappy folks around since its cheaper for them and that's mostly what matters, these days.

cisco is also planning on ripping out all the cubicles and going 'open office'. chambers is convinced its 'better' (its not, but its cheaper and they refuse to admit what the real motivation is). everyone I talked to is in fear of this open-office conversion and many will work from home to avoid the noise and distraction, or they'll just give up and quit, which I also heard is part of the unspoken plan.

I recently saw this kind of thing in the router production source code (paraphrased, just to show the concept):

function_a()
{
    FILE f=open(...);
    read(f, ...)
    do_stuff();
    return;
}

not kidding. opened a file inside a routine, did some i/o and then returned. doh! no need to close the file handle? really?? must be a java guy who didn't know how C really works. and yet, this was in production code and no one seemed to have done a code review or even a smoke test! unbelievable!!

like I said, we have really smart people here and some really lame idiots that, somehow, got hired here and are farking up the production code, designs and even the docs. we are just too large and have hired cut-rate 'programmers'. unfortunately, those are the ones that will likely stay and the higher cost, more experienced folks will be told go leave.

Re:the change, will do us good!

[Anonymous Coward]

Thank the NSA for the distrust they created!

I have a better idea

[slashmydots]

They need to shift focus on lowering prices and not letting the NSA spy on people.

Re:Thanks Edward.

[Anonymous Coward]

So that is Snowden's fault? That is the equivalent of a rapist blaming someone who reports a rape for his ruined reputation.

Re:Thanks Edward.

[SpzToid]

Not to mention OpenSwitch, which Cisco hasn't exactly embraced: http://arstechnica.com/informa... also: http://arstechnica.com/informa...

The NSA screwed over Cisco in a big way (and other American companies, of course): http://arstechnica.com/tech-po...

Courage...

[Junta]

If we don't have the courage to change

It can be debated as to whether this is a necessary thing or a prudent thing or whatever, but regardless of those debates, this s a pretty stupid thing to say. I don't think a CEO should ever characterize their decision to terminate other people's jobs as 'courageous'. There really isn't anything remotely courageous about any of the strategy he laid out. It's not even particularly bold or daring, it's basically the exact thing every executive of every tech company has been saying about their respective companies now.

Not having much of a horse in the race (not working for cisco or even a cisco client), I can't comment on whether it's the right choice or whatever, but it really rubbed me the wrong way to see him refer to layoffs as an act of courage.

Re:Courage...

[mycroft822]

I think it must come from some sort of CEO Bullshit Handbook they all get when they start the job. The CEO at my company has been saying this exact same phrase for about 5 years as she continually does rounds of layoffs, while increasing stock buyback and dividends.

Re:Thanks Edward.

[DickBreath]

Blaming Snowden for NSA abuses is like blaming Al Gore for Global Warming.

It is shooting the messenger.

If that messenger didn't tell us, some other messenger would have sooner or later. It was inevitable.

People only keep secrets (like global warming) when they feel it is their patriotic duty to do so for love of country. When they see widespread abuse, contrary to the values of a democracy, little or no oversight, and their peers feel the same way, it is inevitable that somebody is going to blow the whistle about global warming. If it hadn't been Snowden, it would have been someone else, eventually. This was never going to stay secret forever.

Re:Thanks Edward.

[bulled]

The OP title is idiotic, Mr Snowden did not make the decision to backdoor all USA made networking equipment and he certainly didn't force Mr Chambers to accept the NSA's "help".

How much did move to cable/DSL cost Cisco?

[swb]

Back ~15 years ago if you wanted Internet access in a business you pretty much had to get a T1 and almost always this connection was terminated with a Cisco router.

Nowadays nearly a lot of business Internet is delivered via DSL or Cable via Ethernet hand-off from some cheap device provided by the ISP. Even at places still using T1s its often a vendor-supplied Adtran.

Did this change cost Cisco much business, or did they just make it up and then some on larger routers at providers, large customers and places willing to pay a premium for Cisco LAN equipment?

New Cisco Certification

[Virtucon]

CCGC - Cisco Certified Got canned.

He's also advocating for tax hikes for the rich

[zerofoo]

I get that bashing the rich, while pitying the poor, gives everyone a feeling of moral superiority, the parent post did mention taxing capital gains the same as income.

So if you are a rich guy paying 15% tax on your capital gains investments, taxing that as regular income could push the rate well beyond 25%. That's a tax increase or "broadening the tax base".

Taxes should be flat across the spectrum. You shouldn't get a break because you are extremely rich or poor. Besides, a flat tax is naturally progressive. If you make more, you pay more.

Better still, let's not tax income or property. Since all money in the economy is eventually spent, let's simply tax consumption and fund our society that way. Everyone consumes - those that consume less will pay less tax.

Re:He's also advocating for tax hikes for the rich

[Intrepid imaginaut]

Better still, let's not tax income or property. Since all money in the economy is eventually spent, let's simply tax consumption and fund our society that way. Everyone consumes - those that consume less will pay less tax.

That might increase the cost of some goods or services beyond the benefit provided by the removal of income tax though. Let's say you're earning 300 euros a week, and being taxed 50 of those. You're fifty euros better off, but the overall doubling or tripling of sales taxes (whatever the different in income tax versus sales tax revenues are) has likely increased your expenditure far more than that. It disproportionately targets the poor while providing huge benefits to the likes of landowners who are renting out their properties, leading to a tremendous concentration of wealth, ie a landowning aristocracy. Plus, taxing consumption retards consumption, and the economy needs consumption.

Re:He's also advocating for tax hikes for the rich

[TubeSteak]

Taxes should be flat across the spectrum. You shouldn't get a break because you are extremely rich or poor. Besides, a flat tax is naturally progressive. If you make more, you pay more.

A flat tax is only "progressive" if you abuse the word to mean something else and completely ignore how everyone else is using the word progressive.

Here's a letter from the 3rd President of the USA to the 5th President.
Thomas Jefferson to James Madison
28 Oct. 1785

Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise. Whenever there is in any country, uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. The earth is given as a common stock for man to labour and live on.

That's the author of the Declaration of Independence writing to the "Father of the Constitution" and author of the Bill of Rights.

Better still, let's not tax income or property. Since all money in the economy is eventually spent, let's simply tax consumption and fund our society that way. Everyone consumes - those that consume less will pay less tax.

How did this get modded up.
Everyone has a basic level of consumption: food, water shelter, clothing, transportation.
For the poorest, this basic level of consumption makes up most of their spending.

It's the difference between a 10% tax on 90% of your income or 1% of your income.
That's not progressive, that's not better, that's not fairer.
And the founding fathers thought it was dumb.

Re:He's also advocating for tax hikes for the rich

[penguinoid]

Taxes should be flat across the spectrum. You shouldn't get a break because you are extremely rich or poor. Besides, a flat tax is naturally progressive. If you make more, you pay more.

I used to think that too, but it is simply a fact that it is easier to make money when you have more money -- you are proposing a feedback loop that would promote the rich getting richer and the poor getting poorer. At the very least you have to deduct the cost of necessities. Compare this to a business -- imagine what would happen if you taxed businesses based on revenue, rather than profit. Yet, people see no problem proposing the same for individuals.

Re:He's also advocating for tax hikes for the rich

[mrchaotica]

Every definition I've seen disagrees with you.

Your flat tax is actually defined as "proportional," not "progressive."

Everything hits poor people harder

[zerofoo]

Poor people also pay a disproportionate part of their income on food, clothing, energy, housing and transportation. Should all of those things be cheaper for poor people as well?

Should I have done an income analysis on my neighborhood and if I found that I was on the low-end of the income spectrum, should I have demanded a lower price on my house simply because I make less than my neighbors?

I understand charity for the poor, but demanding that poor people pay less for everything simply because they are poor defeats the point of a market economy. If you are going to do that, why not go all the way to a state planned economy?

I'll tell you why that sucks. Capitalism, even with all its problems, is the best way to distribute limited resources in a world with unlimited demand.

Re:Everything hits poor people harder

[RabidReindeer]

Poor people also pay a disproportionate part of their income on food, clothing, energy, housing and transportation. Should all of those things be cheaper for poor people as well?

Should I have done an income analysis on my neighborhood and if I found that I was on the low-end of the income spectrum, should I have demanded a lower price on my house simply because I make less than my neighbors?

I understand charity for the poor, but demanding that poor people pay less for everything simply because they are poor defeats the point of a market economy. If you are going to do that, why not go all the way to a state planned economy?

I'll tell you why.

Because a pure 100% ideological solution to anything is a recipe for failure.

Sometimes a capitalistic approach works. Sometimes a socialistic approach works. Sometimes some other approach entirely works.

If you can achieve a good blend, where you take advantages of systems at their strong points and use some better approach at their weak points, you'll be better off than you will if you live in a binary all-or-nothing world. Where you may get the best of an ideology, but you'll pay for it by getting the worst as well.

Re:Everything hits poor people harder

[aralin]

You are completely misunderstanding the difference between the taxes, which are decided on by the society and prices, which are decided by the market.

Capitalism has nothing to do with the actual percentages of different taxes that we vote into laws. The poor and middle class are hit by taxes the most proportionately to their means. We cannot expect one group of people to pay 50% of their income in various taxes and fees and another group to pay 15% or less. Our tax system is completely broken and that has very little to do with capitalism, socialism or whatever.

Also, capitalism was great, when the basic resources, like shelter, food, education, healthcare and protection were in shorter supply than the demand. But we live now in society where covering the basic needs of everyone would cost less than 50% of the GDP. A system which leaves some citizens unable to afford to cover their basic needs is not necessary anymore. And since keeping someone without shelter, food, healthcare or education is a choice of the society and not a necessity as it used to be, one can easily argue that such choice is amoral.

Re:Everything hits poor people harder

[anmre]

The rich have robust retirement savings accounts AND pull social security once they've turned 65.

It most definitely is worth something to them, otherwise the cap would not exist.

Re:Everything hits poor people harder

[rahvin112]

Communism is a great idea as long as every actor is altruistic and interested in the welfare of the society above themselves. Because of that base assumption about human behavior it's a terrible system.

Libertarianism is a great idea as long as every actor is altruistic and interested in the welfare of the society above themselves.

Laissez-fair capitalism is a great idea as long as every actor is altruistic and interested in the welfare of the society above themselves.

Etc...

All these "improvements" on the system we have only work if you assume people aren't self-interested greedy pricks that will screw over their own mothers for $5. As soon as you insert the real world into these system it collapses from the sociopaths gaming the system for themselves. As you said you need checks and balances, capitalism with regulation to prevent the abuse of the system that is common appears to be the most functional system, that is as long as you don't get people that are so stupid they think the regulation is the problem.

Re:Everything hits poor people harder

[aralin]

Or you make "I shot the bastard because he was a greedy prick who would screw his mother for $5" an acceptable excuse to tell the judge and jury.

Re: Everything hits poor people harder

[zerofoo]

Social security is not a capitalistic system. It even has the word "social" in the name.

Let's just call social security what it is supposed to be...insurance against poverty in old age.

The problem with SS is that people that don't need the insurance benefit are drawing from it. It would be better to treat the entire thing as an insurance policy...not a defined benefit, but one that exists if a set of conditions is met.

Re:Thanks Edward.

[penguinoid]

If we had a million Snowdens, we'd be the only country anyone would buy security-related stuff from.

Re:Thanks Edward.

[rmdingler]

We do have a million,

just not too many of the models come with the brass balls.