Rumors fly about massive Cisco layoffs

Dear Cisco, the cliff isn't that close if you just stop running toward it.

Cisco could be ramping up for its largest layoff ever, according to news reports flying around the Web today. The reports stem from Reuters, who asked four analysts how they think John Chambers will cut the promised $1 billion in expenses. Analysts answered that they think the company will kill 3,000 to 5,000 jobs.

Columnists, bloggers, and news reports, particularly from financial publications, are piling on with their doom-and-gloom predictions for Cisco, its stock and its leader John Chambers.

Here are a few of the headlines I saw today:

  • Cisco braces for biggest layoffs in its history - Economic Times
  • THE TRUTH ABOUT CISCO: John Chambers Has Failed - The Business Insider
  • The problem with Cisco is marketing, John Dvorak's blog, The Wall Street Journal's MarketWatch
  • Cisco's Coming Layoff Will Be Huge, Analysts Predict - All Things Digital
  • Cisco Losing Tech Leader Status Due to Lack of Risk-Taking, R&D - Minyanville.com
  • How a New Cisco CEO Could Move the Stock Price Up 40% - Seeking Alpha

My first instinct is to ask ... can everyone just take a deep breath? In particular, can Cisco take a deep breath?

I don't want to minimize the concerns over the company's shrinking profit margins, but Cisco still posted 1.8 billion in profit and grew its revenues by about 5%. This is not another Nortel or another Enterasys back in the days when those companies were in crises, bleeding red ink.

This is a profitable company with the predictable problems of a giant that has outgrown its ability to grow.

I hope that instead of wildly cutting, Cisco takes some reasonable actions to give a slow-and-steady course correction. It can be another IBM, instead of another Sun Microsystems.

The above mentioned news stories offer a whole lot of suggestions for how to fix Cisco, so I don't need to pile on, too. I hope that Cisco has $1 billion in fat it could cut without massive layoffs. I hope that instead of another Flip, instantly kicking 550 employees out the door, it can sell under-performing business units or spin them off into their own.

I also hope that this course correction goes beyond big flash-in-the-pan promises by Chambers. Yes, investors want to hear about $1 billion in cuts. But Cisco's  customers are not investors, they are the users of its products. These folks know that the more distracted employees are with the potential that they'll be out of jobs during a horrible economy, the harder it is for them to get the products/services and support they need.

Cisco needs to change its day-to-day ways to service the customer, not treat them as a means to service Wall Street. Ten years ago, it was adored by its customers, network professionals. Today, customers feel that if they are being asked to pay a premium price tag, that should be coupled with premium products and support, not another palm up demanding payment for things like SMARTnet contracts.

UPDATED 05/18: Prior to posting this story, I requested a comment from Cisco PR regarding the layoff reports. I received this response today: "As we outlined on our Q3 conference call, we are in the process of determining where we need to reduce, align and redeploy our global workforce.  We expect to have these decisions made and communicated to our full-time and contractor employees by the end of summer."

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