Cisco Systems Inc. plans to cut 15 per cent of its jobs and sell a factory as part of a plan to cut annual expenses by $1-billion (U.S.) as the network equipment maker tries to revive its fortunes.
Cisco, whose chief executive John Chambers said in April that the company had lost its way, said on Monday that it would cut 11,500 jobs. The company had about 73,408 employees as of the end of the last quarter, a spokeswoman said.
Of those, 2,100 will take early retirement. It will transfer another 5,000 to contract manufacturer Foxconn which will buy a Cisco plant in Juarez, Mexico.
Analysts predicted thousands of job cuts after Cisco said in May that it planned to reorganize the company, which has been losing ground in the network equipment business.
The cuts were deeper than some analysts expected.
"This is a net positive for the company and for investors," said Morningstar analyst Grady Burkett. "We still need clarity around what different businesses the cuts are coming from, but Cisco has been very vocal about the fact that they are refocusing on their core businesses such as data centre, switching and routing."
The job cuts will result in pre-tax restructuring charges as high as $1.3-billion over several quarters.