Cisco confirms massive job cuts

Cisco Systems confirmed that it will cut around 8,000 jobs in the coming weeks to adjust for a sharp downturn in business.

The layoffs, affecting Cisco's full-time salaried employees and contractors, will come on top of a hiring freeze and other substantial cuts in its team of contract workers that have been made over the past several weeks.

Tom Galvin, a Cisco spokesman, said the networking equipment maker would make the job cuts through "involuntary normal attrition." In addition to the job cuts, Cisco plans to reduce its annual travel budget by 60 percent. The company gave no indication as to the size of that budget in dollar terms.

"It is normal during these business times to aggressively manage expenses, and that includes temporary workers, contractors and holding down travel costs, which will be cut 60 percent," he said.

Galvin said 5,000 of the positions being eliminated would affect Cisco's full-time employees. Cisco employs about 44,000 regular workers. The remaining 3,000 layoffs will cull the company's 5,000-strong temporary personnel.

Over the last two years, Cisco has added more than 20,000 employees to its workforce, many of whom came aboard from companies Cisco acquired. Cisco will take a one-time $400m charge to cover the costs of the layoffs.

"We're taking these steps because of the continuing slowdown in the US economy and initial signs of a slowdown expanding to other parts of the world," said company chief executive John Chambers.

Cisco, until recently, was seen as being relatively immune to the economic slowdown because of its dominant market share in the networking space. However, Cisco missed its 2001 second-quarter earnings estimates by a penny a share and warned last month that sales in its current quarter could fall by up to 5 per cent.

Cisco joins a large group of high-tech companies that are cutting expenses, including chip maker Intel which warned on Thursday that its earnings for the current quarter would be less than expected and the company would slash 5,000 workers from its rolls, though mainly through attrition.