Cisco‘s (CSCO) two consecutive under-performing quarters finally prompted CEO John Chambers to take action. One of the first actions Cisco will undertake during reorganization is to sell a set-top box manufacturing plant in Juarez, Mexico. FierceEnterpriseCommunications reports that Cisco will sell the plant to Foxconn Technology Group, The plant has about 5,000 workers who likely will remain as employees of Terry Gou according to FierceEnterpriseCommunications.
In addition, the embattled CEO vowed $1 billion in cuts this year to Cisco’s expenses. Mr. Chambers announced plans to cut its workforce by 11,500. Cisco said about 975, or 15 percent, would be executives with job titles of vice president or above. A Cisco spokesperson said the employee reductions announced would be enough to reach the $1 billion cost-cutting target Chambers set in May.
Gleacher & Co. analyst Brian Marshall told FierceEnterpriseCommunications that the staff reductions were a good first step for Cisco, but he added that the remaining questions, e.g. how Cisco would fix the top line and drive revenue growth and product innovations, need answers.
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I wrote about Foxxcom’s expansion into the Americas here. This also looks like another step in the de-consumerization of the Cisco product line.
Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.