Archive for Saturday, March 10, 2001

Cisco to slash 8,000 jobs

Networking giant blames slowdown

March 10, 2001


— Cisco Systems Inc., the world's No. 1 maker of networking equipment, is cutting up to 5,000 full-time employees about 11 percent of its full-time work force.

Cisco also plans to cut 3,000 temporary and contract workers.

"We're taking these steps because of the continuing slowdown in the U.S. economy and initial signs of a slowdown expanding to other parts of the world," said John Chambers, Cisco's chief executive and president.

Cisco shares closed down $2.19, or 9.6 percent, at $20.63, after hitting a 52-week low of $20.31 during the session. The stock hit its 52-week high of $82 last March.

The announcement was the latest in a litany of warnings and cutbacks by Silicon Valley companies in recent weeks as they cope with a slowing economy and falling demand for computers and everything high-tech.

On Thursday, No. 1 chipmaker Intel Corp. reported its first-quarter revenue would fall short of Wall Street's expectations and it would eliminate 5,000 jobs through attrition.

On Wednesday, Yahoo Inc. warned it would break even in its current quarter, badly missing analysts' expectations.

Sun Microsystems Inc., 3Com Corp. and JDS Uniphase Corp. also have issued warnings in recent weeks.

Larry Carter, Cisco's chief financial officer, said the slowdown may hurt Cisco's earnings.

"While Cisco is only five weeks into the third quarter and it is premature to quantify the impact of this current business climate, we do expect a wider range of estimates for the remainder of this fiscal year," he said.

Cisco, which controls more than 75 percent of the global market for products that link networks and power the Internet, posted pro forma net income of $1.33 billion in the quarter ending Jan. 27. The profit amounted to 18 cents per share, a penny less than Wall Street analysts expected.

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