Cisco Cuts 480-Plus Workers in California, Gives Weak Q1 Outlook

Cisco has laid off nearly 500 workers in California amid reporting a drop in sales to service providers and falling sales in China.

According to Worker Adjustment and Retraining Notification (WARN) notices with the California Employment Development Department, the networking giant cut 397 workers at its San Jose facility and 91 workers at its Milpitas facility, effective July 31. Cisco is the latest channel company to shed workers this year.

This follows more than 400 Cisco workers being let go last November in San Jose.

Any employees who are affected by the layoffs and are on approved leaves of absence will be laid off 14 days following their return from leave, according to Cisco. None of the affected employees are represented by a union, nor do any have bumping rights applicable to the positions in question, it said.

Cisco sent us the following statement: “Over the last few years, we have been transforming Cisco and driving innovation to deliver even greater value to our customers and partners. It’s important that we make decisions to continually ensure that our investments and resources are aligned with strategic growth areas of the business and customer demands. As we realign some of our teams, we are working closely with impacted employees to match them where possible with the wide variety of roles currently open across Cisco.”

Cisco also said it has nearly 1,900 job openings.

Software engineering and technical engineering were among targeted positions in the San Jose and Milpitas layoffs, according to the WARN notices.

On Wednesday, Cisco reported fiscal fourth-quarter results that were slightly better than expected, with revenue of $13.4 billion. However, the results were marred by a 21% drop in the company’s sales to service providers, the biggest drop of the fiscal year, a 2% slip in corporate enterprise, the only decline in that sector all year, and growing weakness in China.

Instinet analyst Jeffrey Kvaal said Cisco followed a solid Q4 with disappointing first-quarter guidance. Cisco cited service provider weakness and, to a lesser extent, China as weak spots, he said.

“While Cisco appeared unruffled by enterprise demand, we remain leery of another leg down,” he said. “China, for one, may weaken further. While likely now only 2%-3% of sales, Cisco was quite downbeat on its call. Management indicated it is no longer invited to bid for requests for proposals (RFPs) it would have been included in prior years. Service provider demand is unlikely to improve. We found management’s tone on the service provider market, particularly regarding 5G, more careful.”