NEW YORK (
reduction of 11,500 workers, 16% of the staff, had nearly no effect on Wall Street, where investors continue to take a wary stance on the networking gear giant.
Cisco said Monday it will
and transfer another 5,000 employees at its cable box unit in Juarez, Mexico to contract manufacturer
Cisco CEO John Chambers announced a little headcount reduction Monday.
The move is expected to help Cisco reach its target of $1 billion in cost reductions and improve gross margins.
But these actions were
, and some analysts say there's no certainty that Cisco has turned a corner along its bumpy trail of decline.
"Fixing operational things and tactical issues are certainly things Cisco can try, but we don't think it is enough to remedy Cisco's strategic mistakes," said RBC analyst Mark Sue.
Some argue that if bigger steps are needed to
, it might be a job that's beyond CEO John Chambers' reach. Still others say Cisco's global exposure put it on the leading edge of a
that may trickle through to other tech suppliers.
"With all the problems at Cisco, investors may be taking a wait-and-see approach on the stock," said Sue. "We are looking for clarity of purpose as the company looks to re-establish itself as a tech leader."
The fundamental problem, say investors, is the lack of sales growth. And the cuts, while an adjustment to declining revenue, are merely a symptom of the decline and not the sign that the top line will improve.
"We're waiting to see a number that suggests that operating margins will increase," said BayBridge Capital's Scot Labin. "And revenue growth is back on track."
Cisco shares were up 1.52% to $15.67 Tuesday, suggesting that Wall Street is still waiting, but is slightly optimistic.
--Written by Scott Moritz in New York.To contact this writer, click here: Scott Moritz, or email: firstname.lastname@example.org.Follow Scott on Twitter at MoritzDispatch