Cisco will cut 15 per cent of staff and sell a factory to Foxconn

NETWORKING FIRM Cisco Systems will lay off as much as 15 per cent of its staff and sell its set-top box factory in Mexico to Foxconn.

The company, which needs to cut $1bn in spending to ensure its long-term viability, will axe 11,500 employees out of the roughly 73,500 people working for it, according to Reuters.

2,100 jobs will be cut by early retirements, while 5,000 will be transferred to Cisco's factory in Juarez, Mexico, which is to be sold to Hon Hai Precision Industry, better known as Foxconn.

The cuts will not affect just factory staff, as many executives, including vice presidents, will lose their jobs as part of the restructuring effort.

The first wave of job losses will occur in August in the US and Canada, with cuts in other countries following some time after, as per local laws.

It's not yet clear what sectors of Cisco's broad business the job losses will come from, beyond the set-top box business, which has proven unsuccessful for the company. Cisco said it is refocusing its efforts on its core networking and data centre businesses.

The move follows the recognition in April by Cisco's CEO, John Chambers, that the company had lost its way. Profit was down 18 per cent in Cisco's fiscal third quarter, from $2.2bn to $1.8bn, and the company warned of a tough fourth quarter ahead.

The sale of the Mexican factory to Foxconn further affirms Foxconn's intention to become a major technology player in its own right, instead of simply manufacturing devices for companies like Apple and Dell. The acquisition of Cisco's set-top box factory, along with LCD TV factories it bought from Sony previously, suggest it is particularly focusing on entering the TV industry.

At the time of writing Cisco's shares were down $0.15, or close to one per cent, from $15.44. µ