Cisco Systems Inc., the world’s largest maker of computer-networking equipment, is cutting 500 jobs, or less than 1 percent of its total workforce, as the company focuses on businesses that are growing.
“We routinely review our business to determine where we need to align investments based on growth opportunities,” Karen Tillman, a spokeswoman for San Jose, California-based Cisco, said in a statement. “This week, Cisco performed a limited restructuring that will impact approximately 500 employees.”
Cisco and networking companies such as Juniper Networks Inc. and Hewlett-Packard Co. are facing increased competition from rivals such as Alcatel-Lucent and Huawei Technologies Co. at a time when capital expenditures are under pressure. They are also grappling with a shift toward “software-defined networking,” which performs tasks that have typically been handled by routers and switches.
The pressures prompted FBR & Co. analyst Scott Thompson to lower his rating on Cisco stock on March 21, citing how the innovations “blur the lines” between networking equipment and standard computer servers.
Cisco rose 0.3 percent to $20.90 at the close in New York. The shares had advanced 6.3 percent this year compared with a 10 percent gain for the Standard & Poor’s 500 Index.
With the latest cuts, Cisco will have eliminated 8,300 jobs over the past two years as it has exited consumer businesses while expanding in corporate software and technology services.