Plan B kicks-in
As has been long-rumoured, Cisco announced it will axe its global headcount by around 6,500, which will include 2,100 participants in a voluntary retirement programme.
The reduction, which will commence next month, represents around nine percent of the global, full-time workforce, and Cisco was keen to stress that 15 percent of employees at VP or above level are also facing the chop. The company reckons the total cost of all this restructuring will be $1.3 billion, with $750 of it being recognised in Cisco's 2011 Q4.
On top of all that Cisco is selling a set-top box factory it has in Juarez, Mexico to Foxconn. This will enable Cisco to transfer another 5,000 employees over to Foxconn, but Cisco says this is a strategic move designed to simplify business operations. It didn't disclose the price of the sale. The 2009 spending spree now seems a lifetime ago.
Cisco will get little consolation from the fact that it's not the only company to be having a hard time right now. Electronics giant Philips surprised markets with a substantial - €1.3 billion - quarterly loss yesterday, citing weakness across a broad range of markets. Meanwhile giant US book-seller Borders is set to go into liquidation, citing the growth of e-books as part of the reason.
"We were all working hard towards a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, eReader revolution, and turbulent economy, have brought us to where we are now," said Borders group president Mike Edwards.
Not everyone in the enterprise technology market is having a tough time, however. IBM announced a good Q2 yesterday, with revenues a billion dollars higher than analyst expectations. Among IBM's claims were that it's winning a lot of hardware business from Oracle.
IBM doesn't get too many headlines since it pulled out of the consumer-facing business a long time ago, but it's worth a quick look at the share price of a company that, amazingly, celebrated its 100th birthday this year. The screen grab from Google Finance below covering the last five years reveals that IBM's share price has doubled since the start of 2009, and its market cap is now close to that of Microsoft.