Cisco To Cut 1,100 More Jobs Amid a Worse-Than-Expected Business Outlook (cnbc.com)

Cisco said this week that it will cut an additional 1,100 employees as part of an expanded restructuring plan. From a report: The cuts come on top of the 5,500 job cuts, or 7 percent of its workforce, announced in August 2016, the enterprise technology company said. Cisco said it plans to recognize hundreds of millions of pretax charges related to the restructuring, which will end around the first quarter of the 2018 fiscal year.

Comments

well its nice

[zlives]

to at least once hear about cisco away from the US Cert alert emails. wonder why the outlook looks grim,
build back doors, get caught... not profit.

No flaming about job losses?

[bluefoxlucid]

Amid FortiNet and friends taking Cisco's business, nobody is flaming about jobs being lost in the industry while ignoring the growth in other competing businesses? Nobody's going to claim unemployment increases while unemployment continues to fall, even in the tech sector? Nobody's going to demand Cisco "just cut back profits" as they lose business and somehow keep paying their existing staff even as their customer base shrinks?

What happened, Slashdot? All I see is Obama and Trump talk (both bullshit).

Re:No flaming about job losses?

[Junta]

It's early in the thread, but I'll bite:

Nobody's going to demand Cisco "just cut back profits" as they lose business"

Well, if they don't cut back profits, they *will* lose business. That's the problem with the leaders of these businesses, they demand growth, but cut back. Of *course* you can't sustain or grow your business if you are defeatist and ditch your people. A good business will accept lower profitability for the sake of investing in some way that delivers growth next go around.

Of course, if you are consigned to a reality that you *won't* grow, go ahead and do the layoffs to increase margin to milk your brand strength while the milking is still somewhat good. Don't expect that to last very long though, as you piss away the value that build that brand strength in the first place.

It would be one thing if they were losing money and simply could not afford to invest in having good talent, but when you have the profit margin to spend, better spend it on your technical vitality rather than tossing it all at the shareholders just because times get a bit lean.

Re:No flaming about job losses?

[bluefoxlucid]

Holy shit, their average quarterly margin for 5 years is 19.28%.

Generally margins are slim, around 7%-12% (e.g. GM average is 4.53% ranging 0.6%-15.8% quarterly; Ford is 4.19% ranging -5.31%-20.86%; Restaurant Brands International owns Burger King, at 12.68% ranged -8.43%-28.75%). 20% average operating profits is sizable. CISCO can cut their margins and reduce their prices by at best 10% to try to compete; with the increased competition, they may very well need to.

Still, that won't help, because...

they demand growth, but cut back. Of *course* you can't sustain or grow your business if you are defeatist and ditch your people. A good business will accept lower profitability for the sake of investing in some way that delivers growth next go around.

The only sustainable model of growth is technical progress. Trade is a form of technical progress, and wage trade (e.g. outsourcing to low-wage countries like China) is only the most-limited form.

Technical progress reduces the labor invested in producing things. This allows the same invested time to produce more stuff--that means you work for 40 hours and can trade that 40 hours for more things, meanwhile you produce more things and so 40 hours of labor can trade to you for more stuff. We represent this with money, thus wages paid as money per time. Three big examples are the production of the hot-blast furnace, which allowed the same labor which previously produced 200 tonnes of iron to instead produce 86,400 tonnes (eliminated 99.8% of the labor involved); the wooden shipping pallet, which turned three days of 16-hour dock work into a 4-hour job (eliminated 91.7% of the labor at each transfer point); and computers, which have provided too much labor savings in too many fields to count.

Trade on technical progress moves labor to a better climate. America has the largest fertile basin in the world and can produce food more-cheaply than anywhere else given the same technology. Canada has vast wood and oil resources. Even China has developed manufacture facilities and expertise, meaning an even-wage basis between America and China would still give you cheaper Chinese imports because they're just better at manufacturing things. There is a great advantage to letting them do what they can do with less labor and giving them our easy-to-make stuff in trade.

Wage trade is advantageous to both economies: the importer reduces consumer costs, while the exporter gains a market to grow their economy. That growth allows the implementation of more-developed technologies, which further grows the economy. Over time, this means that relative wages increase (e.g. China suddenly doubling its wages in 5 years) while technical progress keeps cost down by reducing labor: that $5 thing is still a $5 thing because people make $3.20/hr instead of $1.60/hr and the massive export market has allowed them to fund the integration of technology that cuts the labor used for that $5 thing in half and sell two $5 things instead. Eventually, technology catches up, and wage growth drives prices up to near-even footing.

Once the economy is developed and wages come even, the advantage of importing from a low-wage labor force is lost.

That means your only advantage is whether they're running on better technology: are they capable of producing the thing with less labor than you'd invest, whether that be because of being right next to a resource, or having more experience, or a better installed basis of infrastructure, or just a greater amount of experience and thus the ability to handle those jobs better than you can? If so, it's cheaper to import.

That eventuality is the development of technology. If your technology is better than theirs but your experience is not as good, you can still do it cheaper; if they're so good at this and have such a huge market, they'll upgrade their technology and pass you again.

So do you know how a $30,000 CISCO router at 20% operating prof

Something to be expected

[manu144x]

I remember when I was selling a European made security appliance that one of the sale points was that unlike Cisco, it doesn't have a backdoor. It wasn't a conspiracy either it was just something everybody knew. And this was way before the NSA revealings. Also, american security appliances are strictly forbidden in the central EU institutions, with no exceptions. Personally I think they are the clunkiest hardest to use appliances of all, you need 6 certifications just to install it.

Lower margins equal less money to spend

[ErichTheRed]

Even with Cisco making their own SDN gear, they have a pretty big problem - companies aren't as willing to spend the Cisco premium anymore, even those that do have big on-site footprints ("on-prem" makes me sound like a douchebag brogramming hipster, so I'll just use "on-site.") That means they're selling less gear and having to discount it more. Couple that with them trying to extract as much revenue as they can with their SmartNet contracts, which you have to buy if you want firmware upgrades, and it's no wonder they're hurting.

I wonder how the whole SDN thing will shake out. It's interesting because no one would have ever thought of buying dumb white box hardware to do physical connections a few years ago and controlling the whole thing from an abstraction layer. What I wonder is whether they're going to start believing their own hype and just stop investing in the hardware altogether. It's really easy to let the hype train carry you too far over to the extreme edges - like everything, there will always be a middle ground.

What also makes me wonder is how they can just snap their fingers and lose 1,000 people. First, that's a lot of well-paid people to dump onto the labor market all at once. Second, what were these people doing that made Cisco decide they weren't useful anymore?

Not even news

[mattsday]

I was at Cisco for over 12 years and this kind of announcement isn't really news any more. Employees at Cisco are little more than yearly contractors. John Chambers, the former CEO, used to talk about Cisco being a family. If it is, then it's a highly dysfunctional one now!