Cisco (NASDAQ:CSCO) may have to cut as many as 5,000 jobs to help it reach its goal of $1 billion in cost savings and keep it competitive, writes Gleacher & Co. analyst Brian Marshall in a research note on the networking giant.
The company, he said, raised its headcount by some 10,000 in the past eight quarters but saw slower revenue growth. Cisco currently has a workforce of 73,400 compared with the 44,000 it had in 2001 when it trimmed 8,000 jobs.
Rivals Juniper Networks (NASDAQ:JNPR) and Hewlett-Packard (NYSE:HPQ) continue to nip at the company's heels, and Cisco continues to lose share in its key Ethernet switching segment. CEO John Chambers in May promised to cut $1 billion in expenses from Cisco's bottom line over the next 12 months. He said he'd dump underperforming businesses and products and ax as many jobs as it took to get expenses more in line with revenues.
Cisco's fourth quarter earnings call is set for Aug. 10, at which point the company is more likely to discuss details about its workforce and expense reductions.
"Job cuts will help right the ship," said Marshall.