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Networking titan Cisco cuts 5,500 jobs as profit climbs
[SAN FRANCISCO] Cisco on Wednesday announced plans to cut seven per cent of its global workforce as it shifts its focus from networking hardware to software and services.
The plan to eliminate 5,500 positions came as earnings reports showed Cisco's profit for the fiscal year climbed to US$10.7 billion, 20 per cent more than the previous year.
The rise in profit came despite revenue remaining essentially flat year-over-year.
"I am particularly pleased with our performance in priority areas including security, data center switching, collaboration, services as well as our overall performance," said Cisco chief executive Chuck Robbins.
"We continue to execute well in a challenging macro environment." The corporate restructuring was intended to cut expenses in "lower growth areas" and shift the money into Cisco priorities such as security, cloud computing, data centers, and the internet of things, according to Robbins.
Cisco planned to re-invest a substantial amount of the money saved through job cuts. Elimination of positions was to commence this quarter.
Cisco shares were down slightly more than one percent to US$30.36 in after-market trade following the release of the earnings report.
The Northern California-based Cisco previously announced workforce reductions each year from 2011 through 2014.