Cisco Systems, the largest networking-equipment company, may cut as many as 10,000 jobs, or about 14%of its workforce, to revive profit growth, according to two people familiar with the plans.
The cuts include as many as 7,000 jobs that would be eliminated by the end of August, said the people, who asked not to be identified because the plans aren't final.
Cisco is also providing early-retirement packages to about 3,000 workers who accepted buyouts, the people said. Cisco CEO John Chambers is slashing jobs and exiting less-profitable businesses as competitors such as Juniper Networks and Hewlett-Packard take market share in Cisco's main businesses with lower-priced, simpler products.
Sales of Cisco's switches and routers, which made up more than half of revenue last year, will continue to slip, said Brian Marshall, an analyst at Gleacher & Co. Eliminating jobs will help Cisco wring $1 billion in savings in fiscal 2012, the company said in May.
Cisco expects costs of $500 million to $1.1 billion in the fiscal fourth quarter as a result of the voluntary early retirement program, it said in a quarterly filing. "We will provide additional detail on the cost reductions, including layoffs, on our next earnings call," Karen Tillman, a spokeswoman for San Jose, California-based Cisco, said in reference to an earnings call scheduled for early August.