Chuck Robbins' Cisco shakeup has cost more than $1.5B
https://www.bizjournals.com/sanjose/news/2018/11/26/cisco-layoffs-restructuring-costs-csco-robbins.html?ana=yahoo&yptr=yahoo
By the time it closes out this fiscal year, Cisco Systems Inc. will have racked up $1.6 billion in layoffs costs and other restructuring expenses during CEO Chuck Robbins' tenure.
The San Jose-based company is on track to incur another $300 million in restructuring-related expenses in its 2019 fiscal year, it said in its latest quarterly financial report last week. That's in addition to the $300 million it spent on restructuring in fiscal 2018 and the $1 billion it spent in 2017.
The restructuring costs are primarily cash-based and consisted of employee severance, one-time termination benefits and other associated costs, it said.
Cisco is undergoing foundational changes tied to the shift to the software-first strategy initiated by Robbins, who took the helm in 2015. He enacted his first major restructuring at the networking giant the following year in 2016, where he cut 7 percent of Cisco's global workforce.
"Over the last several years, we have been transforming Cisco to deliver even greater value to our customers," a company spokesperson told the Business Journal in an emailed statement on Monday. "We continue to make decisions to ensure that our investments and resources are aligned with strategic growth areas of the business."
Much of Robbins' recent restructuring has focused on moving teams and talent into the newly created Customer Experience umbrella led by Maria Martinez, a unit that aims to get enterprise customers to renew their Cisco subscriptions.
This month, the company said it would lay off more than 400 employees at its San Jose headquarters and 57 employees in Milpitas, cuts first reported by the Business Journal.
Martinez, the recently hired Cisco executive at the center of the company's organizational shakeup, notified employees of the most recent restructuring in an Election Day email:
“Today, we have made the difficult decision to move forward with a restructuring that will affect some of our CX [customer experience] colleagues,” she wrote. “Over the past 34 years, Cisco has established itself as a remarkable company by all measures. We’ve remained relevant and competitive because of our ability to adapt to the ever-changing needs of our customers. We now find ourselves at an important inflection point — one that calls us to, once again, evolve in order to stay ahead of the market. With that, comes changes in some parts of the company, including CX.”
So far, Cisco, has incurred about $186 million in charges for its 2019 restructuring plan. That means it expects to spend another $414 million between now and July 28, 2019, when its current fiscal year ends.
Cisco has parted ways with at least 10 executive departures in the management shuffle of recent months, including 18-year veteran and corporate development chief Hilton Romanski and 27-year veteran and Advanced Services leader Joe Pinto. Such high-ranking employees typically require higher-priced severance payouts.
Cisco employs more than 14,000 in Silicon Valley, according to the latest Business Journal research, and about 70,000 people worldwide.