More Layoffs Could Come to Cisco if Market Doesn’t Improve

Though some analysts suggest the latest layoffs at Cisco Systems could be just “pruning,” there are some indications that more jobs could be cut if demand for the company’s products slows.

On Monday, the company announced plans to lay off 1,300 employees globally, a year after cutting 6,500 positions. On Tuesday, its stock fell 6 percent on the news.

CEO John Chambers previously told AllThingsD that his reorganization of the company would never quite be complete as it seeks to reinvent itself to meet market demand. It had added 1,353 people since the end of the previous quarter, the majority of whom were either in advanced services or engineers.

In this week’s move, cuts were reported, but not confirmed, among sales staff in Cisco’s Collaboration business unit as well as across all positions in its Wide Area Application Services unit. And William Kreher, an analyst with Edward Jones, told SiliconValley.com that he’d heard the company was trying to shift some field sales work to businesses that it hires to promote its products.

Chambers has been working to focus the company on its core business and eliminate the massive bureaucracy in order to make decision-making easier at all levels. Chambers told AllThingsD that there’s still work to be done in the middle levels.

The company has faced stiff competition from HP, Juniper Networks and others in its core business – selling switches, routers and other networking equipment – while worldwide computer networking sales are expected to fall by 2 percent this year.

Cisco predicting growth of 3 to 5 percent in its fiscal fourth quarter, its busiest period, rather than the 7 percent year-over-year growth analysts had expected.

Meanwhile, the EU on Tuesday approved the company’s $5 billion takeover of TV software developer NDS, which allows cable and satellite TV companies to deliver encrypted content through televisions and other devices.

But there’s even more competition on the horizon with VMware’s $1.26 billion acquisition of Nicira and its network virtualization technology.

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