by Tyler Durden
Aug 16, 2016 9:06 PM
It's easy to shrug off the sharpest productivity decline in 40 years and the worst non-recessionary industrial production contraction in US history because... well it's the new economy, stupid and you just don't get it. But when 'new economy' networking giant Cisco is reportedly set to announce it is laying off a record number of employees - 14,000 representing 20% of its global workforce - surely it is time to question the "everything is awesome" narrative.
As CRN reports,
The excuse for the heavy cuts, which sources said will range between 9,000 and 14,000 employees worldwide, is that they stem from Cisco’s transition from its hardware roots into a software-centric organization...Cisco Systems is laying off upward of 14,000 employees, representing nearly 20 percent of the networking giant’s global workforce, according to multiple sources close to the company.
San Jose, Calif.-based Cisco is expected to announce the cuts within the next few weeks, as many early retirement package plans have already been offered to employees, said sources.
Cisco declined to comment, and is set to announce its fourth fiscal quarter results after the market closes tomorrow."They need different skill sets for the software-defined future than they used to have," said one source familiar with the situation, who declined to be identified.
"In theory the addressable market could be higher and margins richer, but it will take some time to make this transition."
But this massive layoff is the company's largest ever...The networking leader has a history of announcing layoffs at the end of its fiscal year each summer. In August 2014, Cisco revealed plans to cut 6,000 jobs, roughly 8 percent of its total workforce at the time. In August 2013, the company cut 4,000 employees, about 5 percent of its global workforce at the time. Cisco also cut 1,300 positions in July 2012. One of Cisco’s largest layoffs came in July 2011, when the company cut 6,500 employees, representing about 9 percent its global workforce. Cisco had no layoffs in the summer of 2015, coinciding with Chuck Robbins' ascension to CEO that July.
And, as everyone who has traded markets and followed global economic trends knows, Cisco is among the clearest global economic recession indicators (combining the real economy and imaginary-tech economy) there is... and this is the biggest collapse in Cisco's headcount... ever.
Cisco is trading back at its highest since Nov 2007...