Cisco cuts staff, seeks to reduce spending

Cisco on Friday said it will cut full-time, temporary and contract employees in an effort to reduce expenses amid turbulent economic conditions.

Cisco will cut 2,500 to 3,000 temporary or contract workers and between 3,000 to 5,000 regular employees through voluntary attrition, layoffs and position consolidations, the company said.

The company is taking steps to deal with the economic slowdown in the U.S and initial signs of slowdown worldwide, said John Chambers, Cisco's president and CEO, in a statement. Cisco believes the slowdown in capital spending could extend beyond two fiscal quarters, he said.

San Jose-based Cisco will take an anticipated charge of $300 million to $400 million by the end of the fourth quarter of fiscal 2001 for the restructuring, the company said. The staff reductions will take place during the remainder of the fiscal year, Cisco said. The reduction of permanent employees will be part of a larger effort to move personnel to more profitable businesses, Cisco said.

In addition to the staff cuts, Cisco will seek to reduce costs in discretionary spending, such as contract services, travel and marketing expenses. Although Cisco is only five weeks into its fiscal third quarter and it is premature to quantify the impact of the current economy, the company expects a "wider range of estimates" for the remainder of the fiscal year, said Larry Carter, Cisco's chief financial officer, in a statement.

The IDG News Service is a Network World affiliate.