Cisco silent on how job cuts will affect Irish business

It is unclear yet whether network equipment maker Cisco Systems’ decision to sack 4,000 people, or 5% of its global workforce, will affect its Irish operations.

The company already employs 180 at its Galway plant and, as recently as last year, announced a €26m investment plan to increase the workforce by another 115.

A spokesperson for Cisco Ireland yesterday was unable to say what effect the decision to reduce the global workforce would have an Irish operations.

“In the past two years we have managed the business with discipline and focus. In order to execute on the portfolio investment and operational efficiency opportunities we see in FY14, we are rebalancing our resources with a workforce reduction which will impact approximately 4,000 employees, or 5% of our global workforce,” the spokesperson said.

Shares of the world’s biggest network equipment maker fell more than 7%, their biggest drop in more than a year on Nasdaq yesterday.

A lukewarm revenue forecast dashed expectations that Cisco could overcome muted demand for tech infrastructure. Its shares had been up more than 50% in the past 12 months.

Cisco has been whittling away at its workforce and selling off consumer businesses, such as home networking, in a turnaround begun in 2010, when it started losing ground to nimbler rivals like Juniper Networks and Palo Alto Networks.

The company that once specialised in providing the backbone of the internet now sees software and equipment for data centres and corporate cloud networking as its keys to growth. But Wednesday’s results suggest the pace of expansion has been slower than anticipated, analysts said.

“The environment in terms of our business is improving slightly but nowhere near the pace that we want,” said chief executive John Chambers on a conference call following quarterly earnings. We have to very quickly reallocate the resources.”

Cisco said last month it plans to buy cybersecurity company Sourcefire for $2.7bn.

Mr Chambers also said the current business environment was under-performing his expectations. Despite strength in the United States, weakness in Asia and mixed results from Europe continued to dog its business.