
Cisco to cut 4,000 jobs - Suraj-Sun
http://money.cnn.com/2013/08/14/technology/enterprise/cisco-earnings/index.html
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_delirium
The explanations given in the article are slightly confusing. Cisco cites a
"difficult economic climate", but then the numbers don't show Cisco shrinking
or losing money; it's still growing and is quite profitable. So they aren't
cutting staff because the business has gotten smaller, or because they have a
gaping budget hole that needs to be plugged.

Guesses at possible explanations that seem more likely:

1\. Cisco overstaffed in anticipation of larger future growth that didn't
materialize, and is now correcting for that.

2\. Due to productivity increases and/or automation Cisco simply doesn't need
as many employees as they previously did to do the same jobs.

3\. Some kind of shift between sectors of Cisco's business, with the growth
areas being less labor-intensive.

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rgbrenner
Cisco is involved in many different markets. It's entirely possible the
division(s) being cut are shrinking and/or losing money, while Cisco as a
whole is growing.

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frenchy
That would be item 3

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rgbrenner
not really.. it's entirely possible the growth areas are just as labor
intensive or more so, but those positions require people with entirely
different skills than those being laid off.

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auctiontheory
Large companies (I've worked for two, in the Valley) have huge amounts of
bureaucracy. Until you've worked for one, it's unbelievable how inefficient
and wasteful they can be.

Maybe regular layoffs are a way to "force" some efficiency into the system, to
cut out some fat, even if you end up losing some good people with the bad.

The promise of regular layoffs is also an excellent way to keep your employees
toeing the line. Not everyone is a 25-year-old web developer with three
competing job offers at all times.

~~~
spamizbad
My (albeit limited) experience is that the company will become slightly more
efficient short-term, but long term the bureaucracy closes ranks and goes into
self-preservation mode which makes things even less efficient.

Departments will start scheming ways to make themselves an artificial
dependency on daily operations "You can't fire the [team], they handle
approvals for [newly invented step in process]!" Pretty soon you have entire
floors full of people who's entire full time job is essentially keeping their
full time job.

I'm inclined to think that once you're out of "startup mode" your company's
efficiency will have more to do with its culture than its headcount.

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RougeFemme
Another guess. . .which I hate on principle. . .if their quarterly profits,
even if great, have been below analysts' expectations, Wall Street will urge
them to cut costs. . .and they will.

~~~
Swannie
Analyst expectations is the biggest nonsense. Corps the size of Cisco
carefully manage analyst expectations. They have dedicated analyst calls, "we
think you're a little off on your predictions, maybe 5% too low"... the aim is
to exceed analyst expectations by the tiniest margin.

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vladimirralev
Isn't it too early to announce layoffs in 2014? Employees would just start
applying for jobs preemptively and the best will actually get offers by then.
You don't want your best people to lose faith for such a long period of time.

~~~
gsibble
They don't mention what kind of employees these are. Could be factory workers
or salespeople, not engineers who can find a job quickly.

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protomyth
I still cannot believe they bought Flip and shut it down. I would imagine
quite a lot of these jobs are from other acquisitions.

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jusben1369
Amazing pile of cash. Add this to Apple and MSFT and that's a huge horde. I
suspect if/when globally the economy shows sustained health there will be a
massive M&A surge as these guys gobble up small and medium players.

~~~
azernik
"If/when"? Cisco is already acquiring companies at the rate of about one every
month or two [1]. Having been on the receiving end of a rather large one, the
striking thing was how routine and well-oiled that process is.

[1]
[http://www.cisco.com/web/about/doing_business/corporate_deve...](http://www.cisco.com/web/about/doing_business/corporate_development/acquisitions/ac_year/about_cisco_acquisition_years_list.html)

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microcolonel
I wonder why we still publish articles about a basic business practice,
trimming the fat.

And especially(this one thankfully not included) the number of articles which
talk about it like it's a bad thing.

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kbar13
Could someone explain to me like I'm five why companies need to cut jobs when
they are making pretty good profits, and have tons of cash in the bank?

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sokoloff
Because if you can buy something for $9, why pay $10, even if you have $500 in
the bank?

Same reason that someone who's "rich" and "makes good money" would still
negotiate the price of their new BMW/Mercedes or their house.

From here down isn't especially for five year olds, but I think it's still
graspable.

Running a company properly (by many investors' definition) is an optimization
problem, not simply a constraint satisfying problem. If you can have 4000
fewer employees and be more profitable in that state than in yesterday's
state, investors will expect you to do that, even if you're currently
profitable. (The costs [monetary and morale] of doing layoffs inject a certain
amount of stabilizing hysteresis into the system.)

~~~
vladimirralev
I think this is incorrect. For big tech companies any money in the bank are
lost money. The rule is "keep your money low". The best thing a company can do
is to constantly create new projects with higher risk and assign their
employees there. You only have to really cut employees when you run out of
ideas or the risks are too high for some reason.

~~~
mseebach
Money in the bank isn't working and due to inflation is slowly just
disappearing - so that is clearly undesirable.

But it doesn't follow that it's a good idea to just spend them on anything,
you need to spend them on something with a chance of giving you a return. If
you have a division that isn't giving you a return, and you don't see a way of
changing that, keeping it around is just a way of making your money disappear
faster - which is also clearly undesirable.

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tareqak
BBC link to the same news:
[http://www.bbc.co.uk/news/business-23702264](http://www.bbc.co.uk/news/business-23702264)

Cisco earnings report: [http://newsroom.cisco.com/release/1236468/Cisco-
Reports-Four...](http://newsroom.cisco.com/release/1236468/Cisco-Reports-
Fourth-Quarter-and-Fiscal-Year-2013-Earnings?utm_medium=rss)

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cmis
Anyone know what business units these cuts are coming from - core routers &
switches, carrier, security, etc?

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gokulk
I honestly dont understand this sometimes. Such MNCs fire a lot of people and
pays them severage and then after few months hires new people for similar but
slightly different jobs.

~~~
pjmlp
With lower salaries and fewer benefits though.

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frozenport
I frequently see Cisco recruiters so its hard to understand exactly whats
going on.

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gsibble
Possibly healthcare cost related?

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muzz
No evidence of that. Several factors have been mentioned, but no mention of
any concern about healthcare costs.

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dmourati
switchers? Seriously, cnn just lost what little respect I had for them..

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avty
Are the firing concentrated in USA?

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darkhorn
When printing machine was introduced in Ottoman Empire thousants people lost
their jobes. Disaster for the economy?

