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A Cisco Summer

As another fiscal year closes, a time for reflection... and reduction?

cisco rocks
Credit: Cisco

As Cisco’s fiscal year nears an end, not all of the anticipation is giddy excitement about the CEO transition. Perhaps as much is in stark sobriety of the company’s seemingly annual rite of summer, the Limited Restructuring.

Some in the blogosphere expect Cisco to embark upon its seventh or eighth LR in 14 years on July 25, when its fourth quarter and fiscal 2015 year end. Though not exclusively a summertime event, the tradition dates back at least to 2001 -- around the time of the dot com bubble -- when Cisco cut 8,500 jobs.

This year, Cisco might break with tradition. Asked if we can expect a similar occasion this summer to those of 2001, 2009, 2011, 2012, 2013 and 2014, a spokesperson stated in an e-mail:

As we have stated before, as a part of good ongoing operational discipline, we constantly make decisions about resource investments on a geography-by-geography and function-by-function basis to align with market opportunities. In the specific context of your enquiry, we expect to end this quarter with a slightly higher headcount than we started it, and based on current business assumptions, we expect to end our next financial year (runs August 2015 – July 2016) with a slightly higher headcount again.

That's a relief. Because if an LR does commence at the end of this fiscal year, it will coincide with a celebration honoring outgoing CEO John Chambers’ 20 year tenure and encouraging new CEO Chuck Robbins to keep the beat alive. There looks to be a giant Cisco mosh up next week at Levi's Stadium, just down the road from the mothership, with free T shirts!

A stadium full of Cisco Rockers wouldn't look good if as many as 10% -- 7,000 – or even as few as 2% are also invited to an LR. Of the two engagements, they could only decline the retirement party.

The Cisco spokesperson says talk of a reduction as large as 10% at the end of the fiscal year is "wildly inaccurate." Still, whispers flutter that Rowan Trollope’s Collaboration Technology Group will have a seat at the head of any LR table this summer. In Q3, collaboration saw revenue grow 7% and 10% in Q2, but it went through four straight quarters of decline before that.

Seated near CTG will be Service Provider, gazers say, which saw Q3 orders decrease 7% and U.S. orders decline 17%. Reports are that two mobile acquisitions -- Ubiquisys and Intucell -- have already RSVPed to the LR. Service Provider is expected to be a wallflower for a few more quarters. 

And then the rest of the LR trimmings would come across the board.

The send-off for John Chambers and welcome for Chuck Robbins should indeed be an emotional roller coaster, with or without an LR. Another Cisco summer to remember.

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