Cisco's global layoffs: Merger Mania highlights

The once-Silicon Valley myth, the world's largest Internet hardware and Cisco, the corresponding software provider, announced massive layoffs.

Cisco will lay off about 6500 people to help the company cut costs by nearly 1 billion dollars a year, raising profits and laying off more than 9% of Cisco's staff, according to a 18th bulletin posted on its US website. Cisco also sold its set-top box manufacturing plant to Foxconn, which, if combined with the 5,000 workers it had "shifted" to Foxconn, would have reached an unprecedented 11500, accounting for 16%.

Employees in the United States, Canada and several other countries will be notified in the first week of next month. Cisco China's public relations official said the headquarters did not inform the specific situation in China, China has not received a formal layoff notice. But according to Cisco's announcement, the restructuring involved all business sectors around the world, and China is not immune.

145 acquisitions in two years

As part of a $1 billion cut in annual operating spending plans, Cisco will lay off 6500 people, including 2,100 employees who volunteered for early retirement, and about 15% of the vice presidents and above-level employees.

More than that, Cisco plans to sell its set-top box manufacturing facility in Mexico to Foxconn. As part of the sale, Cisco will "shift" the factory's 5,000 workers to Foxconn. This means Cisco will cut the number of workers to an unprecedented 11500 people ——— the dotcom bust in 2001, when Cisco laid off 8000 people.

As of the end of April this year, Cisco China has a total of more than 4000 employees, a total of 73,400 employees worldwide, so the proportion of employees affected by the layoffs will reach 16%.

Cisco has had 4 consecutive quarterly profits below expectations. "said Wen Xingyu, consultant at the Research Center for Communications industry at Sadie.

Cisco profits fell year-on-year in the second and third quarter of the 2011 fiscal year. In fiscal year 2011, Cisco expected revenue growth of just 2% per cent year-on-year, with revenues falling between 108, 400 million and 110 dollars, below analysts ' average estimates of 500 million dollars.

Cisco's share price has fallen by 24% this year. After Cisco announced layoffs, Cisco closed the Nasdaq Trading Market 15, 44 U.S. dollars, down 0.16 U.S. dollars, down 0 99%, which has been quite close to the last year Cisco's stock price of 14.78 dollars.

Industry analysts blamed the decline in Cisco's earnings on its ambitious move into the peripheral markets: Cisco has made 145 acquisitions in two years, and the acquisitions have distracted Cisco from its core router and switch business, but also because of its bloated management structure that has led to a slow decision-making process. ——— just three years ago, Cisco, the world's C E o Chambers, proudly told reporters that Cisco was a very small enterprise that was "successful in every acquisition".

The internet giant has come to the point of "slimming" the focus, and this April, Cisco closed its digital camera company flip and laid off 550 people, thus opening up the layoffs. "We are too complicated," Chambers said. You will see that we are slimming down and more focused. ”

HP, Huawei eats Cisco Market

The reorganization, Chambers stressed, would streamline operations and refocus on the company's five core areas: routers, switches, security and services, video, Synergy, data Center/virtualization/Cloud computing, and architecture. He said Cisco must deepen its relationship with its customers and partners globally, stressing that "we will not do anything but strengthen it." ”

Chambers had to face up to the encroachment of the Cisco market: HP bought 3C OM, a comprehensive alternative to Cisco products to provide customers with integrated solutions, IB m OEM sales Cisco main rival Juniper network products. Prior to that, Cisco sold up to $ billions of a year through the two companies that resell its network equipment.

D ell ' O Ro's report in May this year showed that Cisco's share of the global switch market fell 5.8% to 68.5% in the first quarter of 2011, compared with HP from 9.5% to 12%,juniper from 1.5% to 2%.

Market research company ID c points out that router revenue accounted for 16% of Cisco revenues in 2010, and Cisco routers ' global market share fell from 66% in 2006 to 55% in 2010. In the network security hardware market, Cisco's market share also dropped by more than 10%.

Huawei is also eyeing Cisco in the competition for corporate-network business. Last year, Huawei set up a global corporate business unit focused on companies and government agencies, which was considered the most potent threat to Cisco after Huawei entered the US 10 years ago.

A Cisco dealer said that a Cisco "NET" video conferencing products for example, the domestic price of up to more than 2 million yuan, and Huawei launched a similar product price of only about 1 million yuan. Although Cisco has long claimed that its product is far superior to its rivals, it has been robbed of many orders.

"Global entrepreneur" disclosed that in the same period a subject is more than 6 million yuan of network equipment bidding project, Cisco quoted more than 5 million yuan, and Huawei only reported 1.9 million yuan. "Although short-term losses can be remedied from follow-on services, Cisco listed on Nasdaq cannot easily participate in this bargain game," he said. ”

For Huawei, the head-on confrontation with Cisco is just beginning. Prior to that, Huawei's main revenue came from the operator market, but in the future planning of Huawei, business will develop rapidly and become an important growth pole of company's revenue. Huawei's executive vice president Xu said annual sales of Huawei's corporate business are expected to double to $4 billion trillion this year and reach $15 billion in 3-5 years. Huawei's 2010 business revenues were only $2 billion trillion. Xu even said, "The advent of the cloud computing era, so that the telecommunications industry to start a rerun of the big enterprises." ”

Cisco cuts four main reasons

HP, Huawei and other companies to use Low-cost strategy to rob Cisco main business Market

Acquisitions over the years have distracted Cisco from its core router and switch business

Research and development investment is large, occupy a large amount of money, short-term profits can not guarantee

Cisco institutions are huge, the nonprofit sector is heavily resourced, and the management costs are high.

(Responsible editor: admin)