OPINION
By KELVIN DAVIS
(Kelvin Davis is the director or Greymouse, a cloud service-provider that supplies high quality, time-bound and cost-efficient services through its own facility in Fiji.)
Regarded as a strong indicator of the general health of the technology industry because of its broad customer base, network equipment maker Cisco Systems has announced that it would cut 4000 jobs.
Cisco Systems employs more than 66,000 employees.
Despite a slight improvement in business environment, this is nowhere near to the pace that the company actually wants, as shares of the world’s biggest network equipment maker fell nine per cent after hours.
http://tinyurl.com/pcworld-cisco-touch-source
Why is Cisco important?
Cisco provides the vast majority of the internet switching and routing equipment that you use to browse the internet, update facebook or send an email.
Reasons for job cuts
As Cisco chief executive John Chamber’s comments regarding the performance of the global company is being closely watched by investors, the global company:
- Looks to reduce five per cent of its total workforce to reduce costs and refocus on growth areas;
- Faces uncertain demand for its networking equipment;
- Continues to grapple with an uncertain global IT spending environment; and
- US enterprise gains were offset by weakness in Asia Pacific and emerging markets.
Nothing New
Based in San Jose, California, Cisco is actually no stranger to large work force reductions:
- It announced in July 2011 its plans to shed 6500 employees;
- It started a plan two years ago to cut expenses by US$1 billion which also included 15 per cent reduction in workforce; and
- According to CEO Chambers, the company just has too much in the middle.
http://tinyurl.com/online-wsj-SB10001424127887323
Areas that drove results
Revenue in Cisco’s biggest segment, switching equipment, rose to five per cent yet sales were flat in the company’s original business of routing gear. Areas that drove results include:
- Video-delivery products such as software from Cisco’s acquisition of NDS Group Ltd; and
- Wireless equipment
The company’s forecast for current –quarter revenue growth translated into a range of US$12.2 billion to US$12.5 billion. Analysts however, had expected US$12.5 billion.
http://tinyurl.com/businessspectator-slash-cisco
Facing realities for the future
As analysts and shareholders are looking at the company’s past and present performance, current CEO Chambers together with his directors are looking well into the future.
They realise that most future work will definitely be in equipment maintenance and replacement:
- The switch-and-router gold rush days are over and Cisco knows it;
- This is precisely why Cisco has moved into promising new business;
- New focus is Cloud computing, unified enterprise IT systems, mobile device management and TelePresence;
- It is time to rethink strategies around deploying networking; and
- The largest, scale-out data centers in the world are already moving off of expensive proprietary networking and onto more open networking.
History has shown that the scale-out trends can wind up in enterprise data centers in a few years as the open-source community ramps up.
http://tinyurl.com/eweek-highly-cisco-jobs-sthash
Is it re-grouping or corporate greed?
In order to be more seriously competitive internationally, Cisco has had to consider the following strategies:
- Experimenting with an open-standard SDN approach.
- Considering an entire converged infrastructure approach for blending server, storage networking and security.
And this is exactly where Cisco is planning to re allocate its resources as it lays off five per cent of its workforce.
Many may agree that there is certainly method to Cisco’s actions because it obviously didn’t just get to its current global status by making major mistakes.
Yet, on the other hand, if its current workers are capable of working on new products as well as new services, why resort to 4000 job losses next year?