Cisco's Chambers: Layoffs Were Needed Because 'Market Is Moving So Fast'


As CEO John Chambers sees it, the latest round of layoffs sweeping Cisco is a necessary evil to accelerate the networking giant's push into areas like mobility and the cloud, and to help it keep pace with today's fast-moving, high-tech market.

"It's because the market is moving so fast," Chambers said Thursday in an interview with CNBC when asked what prompted Cisco's decision this week to cut 4,000 jobs from its ranks. "If you watch what we've done, historically, the mistakes that I've made is when I either move too slow, or move fast without process."

The layoffs, which will affect about 5 percent of Cisco's global workforce, were announced alongside Cisco's fourth-quarter earnings results on Wednesday. Cisco shares plummeted nearly 10 percent to $23.92 in after-hours trading, following the earnings release.

 

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In the CNBC interview, Chambers said the layoffs were needed to rebalance Cisco's resources, particularly as it continues to integrate the companies it's acquired over the past year. So far in 2013, Cisco announced or completed seven acquisitions, with the bulk of them being targeted at areas like mobility, the cloud and the Internet of Things, market segments Chambers said Cisco will be bullish on moving forward.

Chambers also stressed that the layoffs, ideally, would have taken place more slowly, over the course of one to two years. But given the high-speed pace of the market, that time frame, he said, just wasn't realistic.

"You've got to move resources into those areas through acquisitions and others [means]. By definition, you've then got to move [resources] out of your traditional business," Chambers said. "If the market was growing at normal rates, and the pace was slower, we would do that through normal attrition and do that over a period of one to two years. But in today's market, you've got to move very, very quickly."

When asked if Cisco would continue its recent acquisition spree, Chambers responded, "yes, absolutely." He also said that many of those acquisitions are already paying off, with the Meraki business it acquired in 2012, for instance, seeing 100 percent year-over-year growth in the fourth quarter.

"When you combine an acquisition with great technology, with channels, and with Cisco's architectural play, magical things happen," Chambers said.

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