Cisco Profits up, but cutting 5%

[tekkychick]

http://www.sfgate.com/business/technology/article/Cisco-4Q-profit-grows-but-plans-to-cut-4-000-jobs-4732720.php

NEW YORK (AP) — Cisco's earnings and revenue grew in the latest quarter as demand for its computer networking equipment increased. But CEO John Chambers called the global economy "challenging and inconsistent" and the company said it is cutting about 4,000 jobs, or about 5 percent of its work force.

5% isn't a huge cut, although I hate to see it when profits are up.

And per P/P's title, if it's global economy, there's only so much the president can do.

from same article -

Cisco's product orders grew 4 percent year-over-year, the same as in the third quarter of this year. Orders in the Americas region grew 5 percent, while Asia declined 3 percent due to economic challenges in the region, Chambers said. Europe, the Middle East, Africa and Russia increased 6 percent. On its own, Europe was up 9 percent.

Chambers said that economic conditions in Europe still "vary significantly" by region, with the north and the U.K. showing "very positive progress."

"We remain cautious, however, given the instability of the southern region," he added.

 

[Cancel 2020.1]

There is always such pressure to grow, especially in the tech industry. Gotta keep growing - every month, every quarter, every year.

It's a little twisted, if you think about it. I mean, isn't there something to be said for bringing in $10 billion, or whatever Cisco does, even with lower-than-average growth? It bums to me out to think that this many people were laid off unnecessarily, just out of a feeling of "being cautious."

 

[cawacko]

There is always such pressure to grow, especially in the tech industry. Gotta keep growing - every month, every quarter, every year.

It's a little twisted, if you think about it. I mean, isn't there something to be said for bringing in $10 billion, or whatever Cisco does, even with lower-than-average growth? It bums to me out to think that this many people were laid off unnecessarily, just out of a feeling of "being cautious."

I hear what you are saying but look at how we as Americans celebrate the growth or rise of the stock market when it is doing well. When our portfolios, retirement accounts etc. go up we rarely make reference that some people may have lost their jobs for it to happen. In theory it would be nice to say I wish the market went up and no jobs were lost in the process but we know that's not the case in reality. (I'm not saying this at you I'm just speaking out loud)

 

[Cancel 2020.1]

I hear what you are saying but look at how we as Americans celebrate the growth or rise of the stock market when it is doing well. When our portfolios, retirement accounts etc. go up we rarely make reference that some people may have lost their jobs for it to happen. In theory it would be nice to say I wish the market went up and no jobs were lost in the process but we know that's not the case in reality. (I'm not saying this at you I'm just speaking out loud)

Very true. It just makes me question how we've evolved as a capitalist country; when a company that has grown still has to lay off workers to appease investors & Wall St. It's like a modern-day volcano sacrifice or something. Seems irrational.

 

[tekkychick]

Very true. It just makes me question how we've evolved as a capitalist country; when a company that has grown still has to lay off workers to appease investors & Wall St. It's like a modern-day volcano sacrifice or something. Seems irrational.

Yeah.

I know of a company that is going private to avoid the pressures; but first it laid off 12% or so to boost the stock price so the people buying it would pay a little more... The company was profitable, the people were needed, but .... they wanted more money.

Sad.

 

[Howey]

Tight work, Tekky! Like I said in the other thread, this has nothing to do with the US.

 

[cancel2 2022]

I hear what you are saying but look at how we as Americans celebrate the growth or rise of the stock market when it is doing well. When our portfolios, retirement accounts etc. go up we rarely make reference that some people may have lost their jobs for it to happen. In theory it would be nice to say I wish the market went up and no jobs were lost in the process but we know that's not the case in reality. (I'm not saying this at you I'm just speaking out loud)

Cisco never really had that much competition apart from maybe Nortel in the past, now they have both Juniper and Huawei on their heels.

 

[cancel2 2022]

http://www.sfgate.com/business/tech...grows-but-plans-to-cut-4-000-jobs-4732720.php



5% isn't a huge cut, although I hate to see it when profits are up.

And per P/P's title, if it's global economy, there's only so much the president can do.

from same article -

That's funny because my son has just started with Cisco in London as a Java programmer.

 

[Cancel 2016.2]

Very true. It just makes me question how we've evolved as a capitalist country; when a company that has grown still has to lay off workers to appease investors & Wall St. It's like a modern-day volcano sacrifice or something. Seems irrational.

You think they did it to appease investors/wall St? It couldn't be because they are planning on future demand slowing?

 

[tekkychick]

You think they did it to appease investors/wall St? It couldn't be because they are planning on future demand slowing?

Not being a Cisco executive, can't say for sure why. But certainly companies have laid off people just to appease wall st. They've also done it in anticipation of future demand slowing.

 

[Cancel 2020.1]

You think they did it to appease investors/wall St? It couldn't be because they are planning on future demand slowing?

With a company like Cisco, I don't think there is much chance that Wall St. wasn't at least a partial factor in this decision.

I don't know what their internals are, or their forecasts. But it would be nice if they could provide some more detail for this kind of layoff outside of just "being cautious."

The company grew, and they're continuing to grow. If you have to lay people off in those circumstances, it says something about how well you manage your resources, imo.

 

[cancel2 2022]

With a company like Cisco, I don't think there is much chance that Wall St. wasn't at least a partial factor in this decision.

I don't know what their internals are, or their forecasts. But it would be nice if they could provide some more detail for this kind of layoff outside of just "being cautious."

The company grew, and they're continuing to grow. If you have to lay people off in those circumstances, it says something about how well you manage your resources, imo.

I don't think they had much choice as Huawei have been undercutting them substantially in the European and Asian markets. I have worked on Huawei routers and switches, they are more or less a clone of the Cisco command line interface (CLI). Cisco even tried to sue them in 2003 but dropped the lawsuit.

http://www.lightreading.com/document.asp?doc_id=604715

 

[Cancel 2020.1]

I don't think they had much choice as Huawei have been undercutting them substantially in the European and Asian markets. I have worked on Huawei routers and switches, they are more or less a clone of the Cisco command line interface (CLI). Cisco even tried to sue them in 2003 but dropped the lawsuit.

http://www.lightreading.com/document.asp?doc_id=604715

There may be legit reasons, and I'm probably generalizing too much.

But I know these companies very well. They HAVE become 100% about the bottom line & making unnecessary "big splash" moves for the benefit of Wall ST. There really isn't much in the way of humanity in their decision-making anymore.

And John Chambers in particular has been there too long.

 

[Cancel 2016.2]

With a company like Cisco, I don't think there is much chance that Wall St. wasn't at least a partial factor in this decision.

I don't know what their internals are, or their forecasts. But it would be nice if they could provide some more detail for this kind of layoff outside of just "being cautious."

The company grew, and they're continuing to grow. If you have to lay people off in those circumstances, it says something about how well you manage your resources, imo.

That is the important part. What pace did they grow at vs. the expected pace of future growth. Companies that are expecting to grow at a similar pace are not going to lay off people because of Wall St. If the growth rate is the same, the layoffs would be do to efficiencies. If they can produce the same level with fewer workers, that is what they should do. *that is managing your resources well*

If they expect a slow down in growth, then they should also lay off a portion of the workforce. Again, managing resources appropriately.

 

[Annie]

That's funny because my son has just started with Cisco in London as a Java programmer.

My SIL works for a newer software applications company in Chicago. They will be opening a London office over the coming year. He and my daughter are heading there in the next month or so. He'll be choosing the site, likely in Canary Wharf. They've avoided so far the need to go public, still have several investors willing to keep it private.

They've never laid anyone off, indeed have been adding 3-5 new 'craftsmen' per year. Obviously with expanding to London, there will be more capital and personnel costs.

 

[Cancel 2016.2]

Not being a Cisco executive, can't say for sure why. But certainly companies have laid off people just to appease wall st. They've also done it in anticipation of future demand slowing.

Companies are supposed to produce a profit. Labor, for most companies, requires training and that costs money. Companies aren't going to lay people off if they are just going to have to turn around and rehire to meet demand. If the company can be equally (or more) efficient with less labor, then they should do that. Wall St does not want you to cut labor just to cut costs in the short run if that means higher long run costs.

 

[Cancel 2020.1]

Companies are supposed to produce a profit. Labor, for most companies, requires training and that costs money. Companies aren't going to lay people off if they are just going to have to turn around and rehire to meet demand. If the company can be equally (or more) efficient with less labor, then they should do that. Wall St does not want you to cut labor just to cut costs in the short run if that means higher long run costs.

Do you think that's how it really works out in practice?

I don't think there is much question that larger companies make these kinds of moves to just appease investors sometimes. Not all of the time - but plenty.

 

[tekkychick]

Companies are supposed to produce a profit. Labor, for most companies, requires training and that costs money. Companies aren't going to lay people off if they are just going to have to turn around and rehire to meet demand. If the company can be equally (or more) efficient with less labor, then they should do that. Wall St does not want you to cut labor just to cut costs in the short run if that means higher long run costs.

Yeah, would be nice. But yes, I do know of a company who cut labor that they will have to rehire later just for short term stock price reasons.

Not saying it's the norm; but it happens.

 

[Cancel 2016.2]

Do you think that's how it really works out in practice?

I don't think there is much question that larger companies make these kinds of moves to just appease investors sometimes. Not all of the time - but plenty.

What investor would want a company to cut labor if that hurt the companies chances of future success? Only a complete novice investor would think that is a good idea.

You cut labor because you can maintain efficiency and production without the labor being cut or because demand is expected to slow down and you do not need the additional labor.

I won't say it has never happened because I don't know that for sure. But it is 100% retarded if a company cut labor because it thought that is what Wall St wanted. Wall St. doesn't want that. It costs to much to rehire a person and train them, not to mention the costs of firing a person.

 

[Cancel 2016.2]

Yeah, would be nice. But yes, I do know of a company who cut labor that they will have to rehire later just for short term stock price reasons.

Not saying it's the norm; but it happens.

then that company is not one you want to invest in as the management is quite foolish.