 |
|
Cisco to Cut 6,500 JobsPOSTED July 18, 2011 SAN JOSE -- Cisco Systems detailed plans to reduce its global workforce by approximately 6,500 employees, which includes approximately 2,100 employees who elected to participate in a voluntary early retirement program. The cuts are part of the company's $1 billion annual operating expense reduction. This also includes a reduction totaling approximately 15 percent of vice president level and above employees. The company as a whole will see a reduction of 9 percent of its regular full-time workforce. All affected employees will receive severance pay and outplacement assistance. Impacted employees in the United States, Canada and select countries will be notified during the first week of August. The remainder of the global workforce reductions are expected to occur at a later date in compliance with local laws and regulations. In connection with this plan, Cisco estimates that it will recognize total pre-tax restructuring charges to its GAAP financial results in an amount not expected to exceed $1.3 billion over several quarters, consisting of severance and other one-time termination benefits. Substantially all of these charges are cash-based. Cisco expects that approximately $750 million of these charges will be recognized during the fourth quarter of fiscal 2011, including approximately $500 million relating to the voluntary early retirement program. The remaining balance of the charges is expected to be recognized during fiscal 2012. Manufacturing Facility Sale to Include Transfer of Approximately 5,000 Employees Cisco also announced an agreement for sale of its set-top box manufacturing facility in Juarez, Mexico, to Foxconn Technology Group. The approximately 5,000 people employed at the facility will become employees of Foxconn in the first quarter of fiscal 2012 and no job losses are expected as a result of the sale. This figure is in addition to the approximately 6,500 employees impacted by the reduction in workforce and the voluntary early retirement program. While this action is expected to create improvements to Cisco's long term cost structure, the strategic intent for this action is to simplify business operations. The labor cost associated with these employees has been categorized as manufacturing costs. Cisco announced earlier this year that it would close its Flip Video camera business with 550 jobs being lost.
© Copyright SVDaily.com |
|