Chief Executive Officer John T. Chambers has led the charge
for the tax holiday, which would be the second since 2004.
He says it would encourage companies to “repatriate” as much as
$1 trillion held abroad, spur domestic investment and create jobs.
By: Benjamin Pimentel
SAN FRANCISCO (MarketWatch) — Cisco Systems Inc. announced Monday that it plans to cut 6,500 employees, as part of efforts to lower costs.
The tech bellwether also said it was moving another 5,000 jobs to Foxconn Technology Group, as part of a sale of its manufacturing facility for set-top boxes in Mexico.
The company said the cuts include 2,100 employees who opted to take part in a voluntary early-retirement program. The plan also includes a 15% reduction of employees at the level of vice president and above.
Cisco also said that it has agreed to sell its set-top box manufacturing facility in Juarez, Mexico to Foxconn Technology. The sale would mean that 5,000 of the facility’s workforce will become Foxconn’s employees in the first quarter of fiscal 2012, according to the company.
The maker of networking gear recently embarked on new initiatives to reduce annual costs by $1 billion.
Analysts had been speculating that Cisco would drastically cut its workforce, with reduction estimates ranging from 5,000 to 10,000 jobs. “No surprises, but part of the healing process for Cisco to get back up on its feet,” Gleacher & Co. analyst Brian Marshall said of the announcement.
Shaw Wu of Sterne Agee also called the news “painful steps in the right direction.” “This should help lower overhead and allow the company to be more competitive in the marketplace,” he said.
Marshall at Gleacher added there had been rumors that Cisco was considering selling the Juarez facility.
But Wu pointed out the sale was a surprise — “a pleasant one, I would add, because it’s always tough to see people lose their jobs. At least now they will be at Foxconn. … Cisco really shouldn’t be in the business of manufacturing, as they are a designer and marketer of products.”
Over the past few months, Cisco has shut down its Flip video-camera business and moved to simplify its business operations through a “streamlined operating model.”