Cisco to lay-off 1,100 more employees as revenues continue to slide

Networking giant to axe more staff on top of the 5,500 to had already planned to make redundant

Networking giant Cisco is to lay-off 1,100 more staff as part of a restructuring programme to shift the company's focus from hardware to software.

The company had announced last year that it was cutting 5,500 jobs - or about seven per cent of it workforce, with 300 UK and Ireland staff facing the axe. The company had estimated pretax charges of approximately $700m for the restructuring.

However, it has now extended the restructuring plan to include an additional 1,100 employees with $150m of estimated additional pretax charges.

It announced the further lay-offs in its third quarter financial earnings, in which total revenue was $11.9bn, down one per cent year-on-year. It was the sixth consecutive quarter in which Cisco reported declining revenues and it is likely to get worse, with the company forecasting a decline of four to six per cent, year-over-year, in its fourth quarter, too.

Cisco increased revenues in three of its product areas - wireless (up 13 per cent to $703m), security (up nine per cent to $527m) and switching (up two per cent to $3.4bn).

However, it had declines in NGN [next-generation networking] routing (down two per cent to $2.03bn), collaboration (down four per cent to $1.02bn), data centre (down five per cent to $767m) and, especially, service provider revenue (down 30 per cent to $207m).

In a conference call, CEO Chuck Robbins suggested that part of the decline in revenue was down to a fall in orders from the US federal government. "It's a pretty significant stall right now with the lack of budget visibility," he said.

Chief financial officer Kelly Kramer later told MarketWatch that the decline in government orders was "dramatic", reiterating Robbins' assertion that they were worth a one per cent decline in third-quarter results.

This was down to the uncertainty within the US government about how much budget each department is going to get.

"I think a lot of the departments in the federal government were waiting to find out what their budget was actually going to be, so that stalled a lot of spending," she said. "We felt that for sure, it was a big driver of our entire public sector segment slowing down this quarter.