Cisco Systems (CSCO) said late Wednesday that it would cut up to 5,500 positions, or 7% of staff, as part of a restructuring networking giant reported better-than-expected fiscal fourth-quarter earnings.
The cuts, which will begin this quarter, were less than the 9,000-14,000 staff reduction that CRN reported Tuesday was likely.
Separately, TechCrunch reported, citing a source that Cisco was aiming for a 15% cost cut that includes layoffs.
Ahead of the actual news, analysts were generally positive on job cuts.
RBC Capital Markets said in a Wednesday morning note: "Given that the Company has been acquisitive over the past six months and Cisco is shifting its focus to software/security/services we think a RIF (reduction in force) would be beneficial to long-term operating margins."
RBC analysts said that a 20% cut might be "severe," but that reducing 10,000 jobs would be "fair."
Jefferies analysts wrote Wednesday morning that job cuts are "likely" and said they would be a positive, or at least not a negative:
"Naturally, any headcount reduction could be viewed as a sign of weakness in business fundamentals. We believe that any headcount reduction at Cisco – at this point – would be driven by their natural re-organization of the business."
Cisco has made several acquisitions in recent quarters to shift to a software and cloud-based model from its router and switch origins. Those legacy divisions have been reporting revenue declines, while other divisions show increases.
Microsoft (MSFT) and HP Inc. (HPQ) also have announced significant layoffs over the past year as they conduct ongoing strategic shifts. Microsoft said last month that it would cut a further 2,850 jobs. HP Inc. announced plans in February to cut 3,000 positions.
Cisco earnings and sales topped forecasts late Wednesday.
Cisco shares fell 2% in initial after-hours trading. Cisco fell 1.3% to 30.72 on the stock market today. On Monday, the stock had its best close -- 31.19 -- since late 2007.
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