Rumours of restructuring at Cisco ahead of fourth-quarter results

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Rumours of restructuring at Cisco ahead of fourth-quarter results

Sean McGrath

Wednesday afternoon will see networking giant Cisco report its fiscal fourth quarter earnings and with ‘unexceptional’ expected to be the operative word, rumours of further restructuring are now prevalent.

The fourth-quarter figures will see an end to what has been an unhealthy fiscal year for Cisco. Despite a turnaround in the last quarterly report, analysts are predicting a 3.4% decline in revenues for the year.

Ahead of the results, speculation is mounting over a major restructuring. An industry source is already writing about lay-offs that could be announced and the same blogger was ahead of the game when it came to forecasting last year’s job cuts.

Brad Reese, who runs the bradreese.com, says that the cuts could be deep, claiming as much as 20% of the workforce might be in the firing line.

Cisco is acquiring something of a reputation for job cuts at the end of the fiscal year. As well as the 4,000 cuts made last August, the organisation also cut 2% of its workforce in the summer of 2012.

There could well be a restructuring in the upper echelons of management too, as Reece tipped Cisco's data centre SVP David Yen as one figure that might be shown the door.

Of course, the question on many investors’ minds, is when will CEO John Chambers step aside? Chambers, who has been at the helm for nearly two decades, said back in 2012 that he might retire in 2-4 years.

While the recent turnaround in revenues might be enough to keep him where he is for the time being, the countdown has certainly begun.

Regardless of the results on Wednesday, there is no denying that Cisco’s core markets have slowed; if the company is to remain a goliath, it must quickly evolve to meet the demands of a much more dynamic marketplace and that could well involve making some painful restructuring decisions.


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