Cisco Continues Layoffs

July 16, 2009: 4:03 PM ET

About 1% of global workforce affected

Cisco Systems (CSCO) on Thursday continued trimming its workforce at its San Jose, CA, headquarters. Sources close to the company say between 600 and 700 employees at the networking giant received layoff notices. "This limited restructuring is part of our ongoing, targeted realignment of resources and was previously discussed on our fiscal second and third quarter 2009 earnings calls," a statement issued by Cisco reads. Like just about every company, Cisco has seen its sales decline in the face of the global recession.

With more than 66,000 employees worldwide, Thursday's cuts comprise about 1% of Cisco's workforce. The cuts are the latest in cost-cutting measures being implemented at Cisco worldwide. During the company's Q3 earnings call, Cisco CEO John Chambers said job cuts were likely to be closer to the high side of the 1,500 to 2,000 the company previously announced. Still, Chambers does not view even 2,000 lost jobs as a mass layoff.

"My own view is that if you have to do a layoff, and we try everything possible to avoid them, it needs to be of critical mass to justify the loss of business momentum, impact on employees and disruption in key projects," Chambers said during the Q2 earnings call. "Being very transparent, the definition of a company-wide layoff to me is at least 10% of your workforce.  In very direct terms, we are not going to consider a layoff at this point in time. And while there are no guarantees, we think the odds are reasonable that if we execute effectively as outlined in this call, that we may be able to avoid large downsizing events."

Chambers is likely to update the company's layoff plan during its fourth quarter earnings call in August. Cisco stock traded up almost 2% for the day.

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Michael Copeland
Michael Copeland

Michael V. Copeland joined FORTUNE as a senior writer in September 2007. Copeland has covered everything from electric cars to e-readers. He is a creator of Tech Mate, an irreverent video series in which he debates (and skewers) digital issues of the day. Before joining FORTUNE, Copeland was a senior writer at Business 2.0. Copeland graduated from the University of Pennsylvania.

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