Cisco Systems has planned a string of layoffs for 4,000 employees, or five percent of its total work force. The company's CEO, John Chambers, claims this is a reaction to a fast-moving market that is forcing the company' to move faster in growing segments and future acquisitions.
On Thursday, shortly after an earnings report the previous day showed Cisco just barely meeting its expectations for the quarter, the company made the announcement saying it will take a charge for the restructuring of the fiscal first quarter.
In an interview with CNBC's "Squawk Box" Chambers discussed the move by the company saying realigning resources is a viable way to look where growth opportunities would that the company would not be able to slow-play some of the new opportunities coming its way. As a result the changes have to be made over the next two quarters.
Chambers says the company will be shifting into new areas of technology such as cloud computing, mobility and Internet products.
"You've got to move resources into those areas. By definition, then you have to move them out of your traditional business," he said. "We literally are investing for the future. You have to balance that from where the resources are going to come from."
One thing that the company made sure to explain to employees is that it won't be moving any jobs overseas. It is merely going to cut existing jobs that it now deems extraneous. Details of the layoffs will be explained to all employees in a conference call Thursday.
According to CNBC, Merrill Lynch analyst Tal Liani questioned Chambers on the layoffs and the company's growth prospects in a conference call. Unfortunately, many believe she was given a dismissive response.
""You know what product orders have done minus the acquisition and spin-outs because that gives you a feeling for what our growth is going to be and those will bump them up or down. It's just not growing at the speed we want," Chambers said.
