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Cisco Plunges on Job Cuts, Q4 Results (Update 2)

Stocks in this article: CSCO BRCD

This story has been updated with interview comments from Cisco CFO Frank Calderoni.

NEW YORK ( TheStreet) -- Cisco (CSCO) shares slumped more than 9% in extended trading after the networking giant announced job cuts that will affect 4,000 employees, or 5% of its global workforce.

The switch and router maker announced the cuts with its fiscal fourth-quarter results, citing the impact of a slower-than-anticipated global economic recovery.

"The environment is improving slightly, but nowhere near the pace that we want," said Cisco CEO John Chambers, during a conference call to discuss the fourth-quarter results, highlighting inconsistencies in global GDP growth.

Chambers, however, said that around a third of the affected employees will be reallocated within Cisco.

Speaking during a post-earnings interview with TheStreet, Cisco CFO Frank Calderoni said that, at this stage, the company does not want to divulge specific details of its restructuring.

"It's important for us to connect with our employees on a global basis, which we will be doing over the next several days and continue to work out specifically what those plans will be and how that will be managed from a global workforce perspective," he said. "Right now, we're not at liberty to say anything more detailed."

Calderoni also explained that Cisco's "workforce rebalancing" will help it focus on key growth areas such as data center, cloud, mobility, software, security and services.

Cisco reported revenue of $12.4 billion, a 6% hike on the prior year's quarter, in line with analysts' expectation of $12.41 billion.

Excluding items, Cisco earned 52 cents a share on net income of $2.8 billion, up from 47 cents a share and net income of $2.5 billion in the prior year's quarter. Analysts polled by Thomson Reuters expected Cisco to earn 51 cents a share.

For the first quarter, Cisco expects revenue between $12.26 billion and $12.5 billion and earnings between 50 cents and 51 cents a share. Analysts surveyed by Thomson Reuters are looking for sales of $12.46 billion and earnings of 51 cents a share.

"My confidence in our ability to be the #1 IT Company is increasing," said Chambers, in a statement released after market close. "Our fourth quarter was a record on many fronts, with record revenue, and record non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per share."

Wall Street had predicted solid numbers from the San Jose, Calif.-based firm, lifted by strength in its telecom and security businesses. Cisco rival Brocade's (BRCD) comfortable top and bottom line beat in its third-quarter results on Tuesday may also have heightened expectations.

Investors were unimpressed by Cisco's quarterly numbers and its job cuts, pushing the company's shares down 9.62% to $23.84 after market close.

Shares of Cisco, which have gained 34.2% this year, closed the regular session up 0.21% at $26.38.

--Written by James Rogers in New York.

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