Cisco's salvation: Cloud computing or mobile interconnection

Summary: Net profit is not expected to be seen as one of the reasons for Cisco layoffs. By the end of April this year, Cisco had a total of 73,408 employees. Marshall, Gleacher & Co analyst, predicted that the layoffs would help Cisco reduce its operating costs of $1 billion a year, while increasing the 2012-year profit by about 8%. After the IBM, HP, Dell and other IT giants, Cisco should also make a difficult transition?

After four consecutive quarters of profit below expectations, market share was eroded by rivals, stocks continued to fall, and a large number of senior executives left, Cisco announced this week a "revival" plan to lay off 6500 people worldwide, "you will see us lean and focus more." "said Chambers, chairman and chief executive of Cisco's board.

The core business is constantly under the impact of HP, Huawei and other rivals, Cisco in order to expand the new business has made a lot of investment and acquisition, but it is clearly "bad", but also brought the company's bloated structure, human and research and development costs are too high, and caused a sustained "financial crisis."

Cisco has made a lot of investments and acquisitions to expand its new business, but it's clearly "on the wrong Foot"

Chambers said it had abandoned the 12%-17% annual revenue increase target set 4 years ago, with weak market demand and price pressures forcing Cisco to lay off staff and cut operations.

In the software and services "in the mainstream" today, focus on hardware Cisco can be immune? Is it the cloud or the mobile Internet that is saving Cisco?

What investors need is a clear direction for future development. Cisco said it would announce its restructuring and recovery plan at its fourth quarterly earnings meeting in August this year.

6500 people cut

July 18, Cisco announced that in order to reduce operating costs, the company plans to lay off about 6500 people, including 2,100 employees who opt to voluntarily retire early. The plan also includes a 15% reduction in the number of executives in the vice president and above. Cisco's layoffs account for around 9% of the company's global workforce. The layoffs will add $1.3 billion trillion in one-time restructuring spending in the next few quarters, with $750 million in the fourth quarter of this year.

Chambers said Cisco announced a restructuring in May, in which Cisco will cut some of its new product development departments and give up some unprofitable businesses. For example, Cisco's multiple development operating systems will be merged, and Cisco will also improve the architecture of the sales department. "The market is changing and we are going to change more quickly than others. Cisco will improve business operations, accelerate the decision-making process, and make new products move faster to the market. "he said.

The fact that net profit is less than expected is one reason why Cisco is being laid off. By the end of April this year, Cisco had a total of 73,408 employees. Marshall, Gleacher & Co analyst, predicted that the layoffs would help Cisco reduce its operating costs of $1 billion a year, while increasing the 2012-year profit by about 8%.

Cisco's main business is now under strong competition from companies such as Juniper and Hewlett-Packard. Cisco's share of the global switch market fell 5.8% to 68.5% per cent year-on-year in the first quarter of 2011, according to the research company, Dell ' Oro, in a report this May. In the global router market, the share fell 6.4% to 54.2%.

According to Cisco earnings, nearly 50% of its sales revenue comes from switches and routers. "Cisco products are more expensive, and domestic manufacturers of products in the past few years in quality promotion is very high, the price is very cheap." A set of Cisco NET Video conferencing products price of more than 2 million yuan, but Huawei's similar products price only about 1 million yuan. A channel trader told The Times weekly.

"Cisco in the backbone of this piece of business still has a very favorable market position, however, in this increasingly mature market, the overall will not have an explosive growth, so the price war is inevitable phenomenon." "Telecommunications experts, flying Elephant net CEO Xiang said.

Cisco's shares have fallen 24% per cent so far this year, while the standard and Poole 500 index rose 4.9%. However, Cisco China has been operating normally because it has not been notified of layoffs so far, a Chinese relative told The Times weekly.

(Responsible editor: admin)