Daily Interview: Where Does Cisco Go From Here?

Cisco (CSCO Quote) announced Friday it would eliminate up to 17% of its workforce through "voluntary attrition, involuntary attrition and the consolidation of some positions." The company also said that a slowdown in capital spending by telecommunication companies could preclude "the so-called V-shaped recovery bulls were banking on."TSC spoke with Michael Cristinziano, senior vice president of equity research at Gerard Klauer Mattison about the significance of the news for Cisco and what it means for the widely held position that the U.S. economy will strengthen in the second half of the year.

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TSC: How is Wall Street taking the news that Cisco will cut between 5,500 and 8,000 of its full- and part-time workforce of 48,000? Will investors view this as a positive cost-cutting measure, or will they instead focus on the fact that Cisco is experiencing slower sales in Europe and Asia than anticipated?

Cristinziano: The fact that Cisco -- which has hired 3,000 to 4,000 people for the past few quarters -- foresees a worldwide slowdown in networking demand necessitating a significant cutback in their workforce is disconcerting. ...