After yesterday’s leak by CRN that Cisco would terminate some 14,000 workers, or about 20% of its 73,000 workforce, investors were looking forward to today’s earnings announcement by the tech giant not so much for whether it would beat expectations (it did not on a GAAP basis, with $0.56 in GAAP EPS, however it did beat on a non-GAAP basis, reporting $0.63, above the $0.60 expected), but whether it would indeed reduce its workforce to a level not seen in a decade.
We got the answer moments ago, when Cisco indeed announced the latest mass layoff, which however was “only” 5,500 people, a mere 7% of its workforce.
Today’s market requires Cisco and our customers to be decisive, move with greater speed and drive more innovation than we’ve seen in our history. Today, we announced a restructuring enabling us to optimize our cost base in lower growth areas of our portfolio and further invest in key priority areas such as security, IoT, collaboration, next generation data center and cloud. We expect to reinvest substantially all of the cost savings from these actions back into these businesses and will continue to aggressively invest to focus on our areas of future growth. The restructuring will eliminate up to 5,500 positions, representing approximately 7 percent of our global workforce, and we will take action under this plan beginning in the first quarter of fiscal 2017.
And, with the market hoping to see nearly three times more workers fired, despite the top and bottom line beat by CSCO, the stock is no lower in the after market, as algos punish management for not being a bunch of inconsiderate monsters.
However, don’t despair CSCO longs: as CRN reported, “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.” This likely means that once the initial shock of the first round of layoffs passes, the company will proceed with rounds 2 and 3, sending the stock right back up.
via http://ift.tt/2aZXi7a Tyler Durden