Cisco will slash around 6,500 jobs and sell a manufacturing plant to Foxconn as part of a plan to achieve cost savings of around $1 billion (€707 million).
The vendor plans to cut full time staff by 9%, including 15% of its executive level employees, from the US, Canada and “select countries.” Cisco hopes 2,100 staff will exit via an early retirement program, but still expects the total cost of severance packages to hit $1.3 billion, which will be expensed over the firm’s fiscal 4Q11 and full year 2012.
An additional 5,000 employees will be transferred to Foxconn through the saleof Cisco's set-top box manufacturing facility in Juarez, Mexico. The transaction is expected to close by October and no job losses are expected.
Cisco has been under pressure to streamline its operations and reduce costs in response to increased competition in its core markets.
In May, Dell'Oro estimated that Cisco's share of worldwide switching revenue fell nearly 6 percentage points to 68.5% in 1Q11.
The company has already made moves to withdraw from the non-core consumer segment, shutting down the Flip video camera unit it acquired in 2009.