Cisco tight-lipped over where jobs will be axed

Chief executive John Chambers predicted slowing growth in the coming three months. Picture: AFP/Getty

Despite posting a rise in fourth-quarter profits, chief executive John Chambers, predicted slowing growth in the coming three months amid a “mixed and inconsistent” recovery across Cisco’s global markets.

As a result, the group will shed a further 4,000 jobs, equivalent to about 5 per cent of its worldwide workforce.

A UK spokeswoman for Cisco said there was not yet any detail available on where the cuts would fall, or what types of jobs were to be shed.

Cisco employs about 150 people in Scotland at sites in Edinburgh and Glasgow.

Analysts said that the fourth-quarter results highlighted the challenges facing Chambers, who is looking to revive growth as Cisco’s core networking equipment business comes under pressure.

With much of the fourth-quarter increase in profits down to cost-cutting, Cisco is searching for new revenue streams to supplement its traditional business in the routers, switches and servers that form the backbone of the internet.

Margins on such equipment are under pressure amid increasing competition from the likes of Juniper Networks and Huawei Technologies.

In total, Cisco has spent nearly £7 billion during the past three years buying dozens of companies in a bid to branch into new areas such as software and security.

“In the past two years we have managed the business with discipline and focus,” the Cisco spokeswoman said.

“In order to execute on the portfolio investment and operational efficiency opportunities we see in [2014], we are rebalancing our resources.”

The announcement follows a smaller cull earlier this year when Cisco cut 500 jobs.

Including the latest job losses, Cisco has eliminated a total of 12,300 jobs during the past two years as the company has exited consumer businesses to focus upon corporate software and technology services.

Although sales remained strong in the United States, fourth-quarter sales were weak in Japan, China and certain parts of Europe.

In Japan and China, orders for the upcoming quarter are down by 3 per cent.

“This recovery is more mixed and inconsistent than the others I have seen,” Chambers said in a conference call. “The environment in terms of our business is improving slightly, but nowhere near the pace that we want.”

For the fourth quarter, Cisco reported a net profit of $2.3bn (£1.5bn), up from $1.9bn a year earlier. Revenues were 6 per cent higher at $12.4bn.

For the full financial year that ended in July, Cisco reported net income of $10.9bn on revenues of $48.6bn.

However, revenues for the current quarter are expected to come in at between $12.2bn and £12.5bn, at the lower end of analysts’ expectations.