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Cisco freezes hiring, planning cost cuts
By siliconindia
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Saturday, 08 November 2008, 00:15 IST |
1 Comments
San Jose: Job aspirants world wide has taken another blow to their hopes with Cisco announcing that it will completely freeze hiring in this entire quarter after it recorded a five percent hike in first-quarter earnings and an eight percent increase in sales.
For the period ended October 25, 2008, Cisco posted first quarter net sales of $10.3 billion, and net income of $2.5 billion, or 42 cents per share. This is 3 cents per share better than analyst estimates.
CEO John Chambers estimated total revenue for this quarter will be a maximum of 10 percent below levels two years ago in the same time. Chambers also points out that the slow down in demand is not only in North America and aggregate demand is declining in Europe and Asia as well, further indicating global economic uncertainty and volatility. Chambers still remains optimistic and says the company is still expected to grow by about 15 percent by next year. Cisco stock price has fallen by 5 percent subsequent to the news in after hours trading.
Cisco also said it plans to cut $1 billion out of its total operating expenses through what it calls 'involuntary attrition' and other measures.
Network world report that while revenue from switches revenue was $3.6 billion, up 8 percent from last year, that from routers was $1.9 billion, up 1 percent from Q1, 2008. Advanced Technologies, which includes unified communications, wireless LAN, video, security and networked home, was $2.7 billion, up 17 percent from last year. Unified communications grew 22 percent, WLANs 21 percent, and security 19 percent from last year, Cisco said. 'Other' products, including optical and cable, was down 13 percent from last year.
While Chambers said he's confident that Cisco can weather - and ultimately even prosper from - the current economic storm, he outlined ways that Cisco plans to cut back. The hiring freeze, combined with other efforts such as a reduction in travel, events and marketing expenditures, should help the company reduce expenses by $1 billion from its original budget for its second quarter, he said. The condition was aggravated by the situation where orders in the U.S. were down 8 percent, with enterprise orders declining in the high-teens. Globally, enterprise orders were down 11 percent in Cisco's first quarter, compared to flat order growth for other company markets.
