Cisco trims workforce by 9%, sells set-top box factory in Mexico to Foxconn

Cisco Systems (Nasdaq: CSCO) announced that it's cutting its workforce by 6,500 people, which represents about 9 percent of its total number of employees, in a bid to reduce costs by $1 billion this year.

The networking giant has suffered from two consecutive underperforming quarters and said that 2,100 more employees had opted to take advantage of an early retirement package. Cisco estimates the moves will cost it $1.3 billion over several quarters because of severance and other one-time termination benefits. Cisco expects that approximately $750 million of these charges will be recognized during the fourth quarter of fiscal 2011, including approximately $500 million relating to the voluntary early retirement program. The remaining balance of the charges are expected to be recognized during fiscal 2012.

Cisco has also sold its its set-top box factory in Juarez, Mexico to Taiwanese electronics outsourcing company Foxconn Technology Group (Taiwan: 2354.TW). Cisco said about 5,000 workers at the facility will join Foxconn in the first quarter of its fiscal 2012. The company gained the factory from its acquisition of Scientific Atlanta in 2006.

For more:
- see the release
- this Wall Street Journal article (sub. req.)
- and this Light Reading article

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