Cisco slashes up to 5,500 jobs

Cisco bets big on 'Smart Cities'
Cisco bets big on 'Smart Cities'

The hammer has fallen at Cisco.

Cisco (CSCO) confirmed Wednesday that it will slash 5,500 jobs, or about 7% of its total workforce, to cut costs and make room for investments in trendy new areas like cloud computing and the Internet of Things.

"Today's market requires Cisco and our customers to be decisive, move with greater speed and drive more innovation than we've seen in our history," Cisco said in its earnings release announcing the cuts. "We expect to reinvest substantially all of the cost savings from these actions back into these businesses and will continue to aggressively invest to focus on our areas of future growth."

The layoffs, while significant, are smaller than had been rumored. CRN, a technology publication, first reported Tuesday that Cisco planned to cut 14,000 jobs or almost 20% of its workforce.

Cisco is pushing to make the shift from pricey networking hardware for businesses to software and cloud services.

Related: Cisco CEO: Diversity quotes are not the answer

Under CEO Chuck Robbins, who took over from John Chambers about a year ago, Cisco has pushed to stay competitive through a $1.4 billion acquisition of Jasper, a company focused on the Internet of Things, and through partnerships with businesses like Apple.

Despite those concerns, the layoffs come as Cisco remains in a position of some strength.

Cisco's earnings and revenue beat Wall Street estimates for the quarter ending in June. Overall sales hit $12.6 billion for the quarter, up 2% from the same period a year earlier.

Cisco is far from the only tech company making layoffs this year.

So far in 2016, tech firms have announced 62,917 job cuts, not counting the latest layoffs from Cisco, according to data provided by Challenger, Gray & Christmas, Inc. That's up 71% from cuts made in this sector last year through the end of July.

Those cuts have come from companies like Dell, Intel (INTC) and Microsoft (MSFT), among others.

Worsening the situation at Cisco on Wednesday, the company was also forced to put out a public advisory to all of its customers that its products are vulnerable to hacking and spying by the U.S. National Security Agency.

Earlier this week, a powerful set of cyberweapons -- largely believed to belong to the NSA -- was dangerously leaked to the public. These hacking tools exploit vulnerabilities in Cisco firewalls, as well as products by other technology companies.

Cisco rushed to release updates to at least eight of its products.

"I wonder what Cisco's business relationship with the U.S. government is like now, after this," cybersecurity expert Dan Tentler wrote on Twitter.

-- Jose Pagliery contributed to this report

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