Cisco, the communications networking giant that symbolized the high-flying days of the 1990s tech boom, on Monday announced that it would cut about 6,500 jobs or 9 percent of its regular full-time workforce.
The news adds another sobering chapter to the story of a U.S. economy that is struggling with high unemployment and underemployment after suffering the worst recession in generations.
Cisco revealed the workforce reduction includes 2,100 employees who agreed to take a voluntary early retirement. The company said affected employees in Canada, the United States and select countries will be notified the first week of August. Upper-level employees are not immune from the decision. Cisco disclosed that roughly 15 percent of vice president level employees and higher-ranking workers will be impacted.
The silver lining for workers is that Cisco will provide all affected employees severance pay and outplacement assistance.
The layoffs are part of Ciscos plan to simplify its organization, refine operations and slash annual costs by $1 billion.
In connection with its plans, Cisco estimates that it will recognize total pretax restructuring charges of up to $1.3 billion over several quarters, with $750 million of the charges to be recognized during the fourth quarter of fiscal year 2011.
In another development, Cisco announced an agreement to sell its set-top manufacturing facility in Juarez, Mexico, to Foxconn Technology Group.
There are roughly 5,000 individuals employed at the manufacturing facility, and Cisco said all the workers are expected to become Foxconn employees in the first quarter of fiscal 2012. The strategic reason for the sale was to simplify Ciscos business operations, the networking giant said. Cisco said the agreement also should improve its long-term cost structure.