Amid Record Low Tech Layoffs, Cisco’s Is The Year’s Largest Downsizing

Cisco’s announcement that it would be cutting 6,500 jobs stand out as the year’s largest job-cut in an industry that has seen record low downsizing, a report released Wednesday shows.  The company run by CEO John Chambers, once seen as a visionary, is giving further evidence of its battered state.
The tech sector has remained strong amid a weak economic environment.  Companies like Apple and Google have posted record-breaking profits despite 1.8% GDP growth in the country as a whole and a slowing global economy.
In terms of tech jobs, the industry has also delivered.  In what historically has been a sector “that at one time commonly saw job-cut events numbering in the tens of thousands,” announced lay-offs have fallen 60% in the first six months of 2011 (compared to the first half of 2010) and are on track for their lowest ever, according to a report by Challenger, Gray & Christmas.
As job cuts fell to 14,308 in the first half of the year, the sector has also added a good amount of jobs, announcing plans to add 26,000 workers in the first six months of 2011 (“which represents just a small portion of actual hiring, since most employers do not formally announcing hiring plans,” according to John Challenger, CEO of the firm that wrote the report).   Employment in computer systems design and related industries has grown by 42,000 since the year started, according to data from the Bureau of Labor Statistics. (Read Jobs Report Sucked, But S&P 500 Will Finish year Up 8% To 10%).
“The Cisco cuts notwithstanding, the overall health of the technology sector remains very strong. In fact, it is one of the best performing industries in the economy at the moment. It is highly unlikely that planned layoffs in the second half of the year will be heavy enough for the year-end total to surpass last year’s record low 46,825 job cuts,” said Challenger.
Before the Cisco announcement, the largest reported layoff of the year was Qwest Communications announced 1,800 job-cuts back in March.  Cisco’s cuts more than triple Qwest’s layoffs.
While it may be healthy for the company in the medium-run (the layoffs are part of a plan to cut costs by $1 billion), the size of Cisco’s announced job-cuts is indicative of the company’s fragile health and weak condition.  Cisco’s stock is down more than 21% year-to-date.
Source http://blogs.forbes.com/