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Cisco Plans to Cut 4,000 Jobs, as It Posts Profit Gain

August 15, 2013 | Telepresence Options

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Story and images by Jenna Wortham / NY Times

Cisco Systems, the technology industry's biggest computer infrastructure equipment maker, said on Wednesday that it planned to cut 4,000 jobs, or roughly 5 percent of its work force, in an effort to trim costs and reorganize during what executives described as a "challenging" global economic climate.

The cuts were announced even as Cisco, which sells networking software and services and videoconferencing systems,�reported�better-than-expected earnings in the fourth quarter of its fiscal year.

John Chambers, the company's chief executive, said that despite the promising figures, the company still faced significant challenges in the coming months.

In a conference call on Wednesday with investors and analysts, he said that Cisco needed to improve its ability to react quickly to market changes.

"We've got to take out middle-level management," he said. "What I'm really after is not speed of decisions but speed of implementation." He said that the company's performance had improved over the last year, but that "it's just been slow."

Cisco reported that it earned $2.27 billion, or 42 cents a share, in the fourth quarter, up from $1.92 billion, or 36 cents a share, during the previous year. Revenue rose 6 percent, to $12.42 billion, from $11.69 billion. Analysts had expected the company to report revenues of $12.41 billion. Sales in the United States were strong, but international sales were a concern.

Cisco's forecast for the current quarter was lower than what analysts had predicted. The company said it expected revenue to increase by no more than 5 percent from the same quarter a year ago. Analysts had expected a gain of 7 percent.

The news sent Cisco's shares tumbling almost 10 percent to $23.87 in after-hours trading.Shares of rival companies like Juniper Networks also fell.

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