Cisco has announced that it will be cutting 4,000 jobs, or 5% of its workforce, next year despite an 18% increase in profit in its latest quarter.
The network equipment manufacturer report net income of $2.3 billion, a record for its fourth financial quarter. Revenue rose 6% to year-on-year to $12.4 billion.
But CEO John Chambers said that the state of the global economy continues to put the company under pressure.
"The environment in terms of our business is improving slightly but nowhere near the pace that we want,” he said on a conference call with investment analysts yesterday. “I’m very pleased with our momentum in the market, it is just not growing as fast as we need."
Chambers said the money Cisco saves by cutting the jobs will be reinvested in growth areas of the business.
"Now if we're going to lead in this industry, the one thing I have learned over the years is you're the first mover," he said. "We have to very quickly reallocate the resources. So, you know, a fair amount of that 4,000 people will be allocated to new growth opportunities."
Following an aborted attempt to branch into consumer technology, Cisco is now seeking growth in other areas of enterprise IT beyond networking, including software and cloud computing.