Cisco to cut 4,000 jobs despite impressive Q4 numbers

John Chambers points to erratic economic upturn and flabby middle-management structure

Despite an upbeat set of fourth-quarter numbers, Cisco is to cut 4,000 jobs, with chief executive John Chambers admitting the company "didn't drive productivity this last year".

In a conference call with investors, transcribed by Seeking Alpha, Chambers detailed plans to lay off about five per cent of his firm's workforce as he claimed that the recovery of the global economy has been slower and more erratic than the vendor may have hoped. Stronger performances in Europe and the US have been offset by softness in Asia-Pacific, Japan and emerging markets, said the Cisco chief.

Chambers also hinted that he wanted the vendor to improve its operational speed by trimming some excess baggage from a somewhat bloated middle-management layer.

"We just have too much in the middle of the organisation," he said. "When you have [those] types of layers and standard controls without meaning to... we're just not moving with the speed that we need in this area. So you can see us focused very much in this area on expanded control and also layers."

But the networking chief asserted that many of the 4,000 affected staff may ultimately to be redeployed in better-performing areas.

"If we're going to lead in this industry the one thing I have learned over the years is [you have to be] the first mover," said Chambers. "We have to very quickly reallocate the resources. So a fair amount of [those] 4,000 people will be allocated to new growth opportunities."

For the three months to 27 July, the networking giant posted sales of $12.4bn (£8bn), an increase of 6.2 per cent on the corresponding period last year. Profitability was on the up as net income grew at almost three times the top-line growth rate, spiking 18.4 per cent to $2.3bn.

For the full 2013 fiscal year, Cisco's turnover rose 5.5 per cent year-on-year to $48.6bn, while net profit soared 24.2 per cent to $10bn.