Cisco plans to cut up to 8,000 jobs

Networking giant Cisco Systems Inc. confirmed Friday that it would reduce its workforce of 48,000 employees by up to 8,000 workers.

CEO and Chairman John Chambers said the cuts would include 2,500 to 3,000 temporary contract workers and between 3,000 and 5,000 regular employees. Chambers said the latter would come “through voluntary attrition, involuntary attrition and consolidation of some positions.”

Cisco officials said the company anticipates the cutbacks will come with a one-time charge of US$300 million to $400 million occurring by the end of the fourth quarter.

Cisco now has 44,000 regular employees and approximately 4,000 temporary workers.

“We’re taking these steps because of the continuing slowdown in the U.S. economy and initial signs of a slowdown expanding to other parts of the world,” Chambers said in a statement today. “We also now believe that this slowdown in capital spending could extend beyond two quarters.”

A Cisco spokesperson couldn’t be reached for further comment.

Last month, Chambers warned that there could be financially troublesome quarters ahead for the San Jose-based company, due in large part to the drop in spending predicted for the services provider market, where Cisco wants to gain market share.

Chambers also noted last month that what he termed a recession in the U.S. manufacturing sector could adversely affect Cisco this year. U.S.-based manufacturing companies make up about 20% of Cisco’s enterprise networking business.

Stan Schatt, an analyst at Giga Information Group Inc. in Cambridge, Mass., said there was no immediate indication that cuts would be in critical operating areas, such as optical networking, where Cisco is making a big push.

The Cisco announcement came just one day after Intel Corp. announced that the slowing economy had forced it to reduce revenue estimates for the first quarter and warned that it would cut 5,000 of its 90,000 jobs during the next nine months.