Cisco to cut 4,000 jobs despite strong quarterly earnings

Networking giant beats analysts' expectations for income and revenues but continues with its restructuring plans

Cisco is to axe five per cent of its workforce, or 4,000 staff in the next year as part of its restructuring plans.

This is despite the networking giant reporting a net income of $2.3bn, a rise of $4m from a year earlier. The firm beat analysts' expectations for its revenues which increased by 6.2 per cent to $12.42bn (£8bn) from $11.69bn, also a year ago.

However, the positive results for the San Jose, California based firm did not alter the firm's plans to let thousands of its employees go.

"The environment in terms of our business is improving slightly but nowhere near the pace that we want," said Cisco's chief executive John Chambers on a conference call following the quarterly earnings. "We have to very quickly reallocate the resources."

Chambers said the cuts were as a result of slowing demand for its networking equipment, citing Japan, China and Europe as areas where demand was weaker than expected.

He said that Cisco will move some of its employees to areas of the business that it believes are expanding such as cloud computing and datacentres, as it moves away from consumer products.

Cisco has estimated revenues of between $12.2bn and $12.5bn for the current quarter, suggesting that it could miss out on analysts' expectations of $12.5bn.

Shares of the network equipment maker fell more than nine per cent after hours.

The firm's plans to cut jobs comes more than a year after it said it would axe 1,300 employees.

At the time, vice-president of corporate communications at Cisco, Karen Tillman, said that the restructurings were part of a "continuous process of simplifying the company, as well as assessing the economic environment in certain parts of the world".