Cisco could see major layoffs soon

SAN JOSE, Calif.

Cisco is San Jose's largest employer, with a local workforce of more than 15,000 people. The pending layoffs will be among the most significant cutbacks in company history.

"The Silicon Valley economy is very large, so the specific impact, even of a company like Cisco on a big economy, is not of major concern," said Kim Walesh, San Jose's director of economic development. "The concern is to redeploy the talent as quickly as possible."

The market research firm Gleacher & Company made headlines Monday with its report that predicts Cisco's global workforce of more than 73,000 will be cut by 5,000, 1,000 positions through early retirement packages and another 4,000 through layoffs, saving the company a total of one billion dollars a year.

Gleacher analyst Brian Marshall says, "While this is a difficult decision to make, in our view, it is required in order to maintain the 'competitiveness' of CSCO going forward."

Company CEO John Chambers has already taken notable steps this year to restructure the networking giant. It's flip videocam operations are gone, consumer businesses realigned and management forces are being reorganized. If the latest round of local layoffs goes above 1,000, it could have an impact on countywide employment numbers.

"You combine this layoff with the city and county layoffs that have happened recently, those were good solid jobs, and if they go away that's tough," said Employment Development Department (EDD) labor market consultant Janice Shriver.

Cisco remains the dominate player in network switching and routing. These anticipated layoffs are second only to the 8,000 people the company eliminated in the market crash of 2001. Job losses now will have a domino effect on the already unemployed.

"I know there's a lot of people looking for a job," said technology job seeker Guled Luge. "The competition is big."

"They are going to do what they need to do to right the ship and keep the ship moving in a positive direction," said Walesh. "We are confident of that."

Cisco says it will provide details on the layoffs during its Aug. 10 quarterly conference call.

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