Cisco's 4000 job cuts won't touch new acquisition, Sourcefire

Employees of the US$2.7 billion security company won't be affected by the belt-tightening, Cisco says

Cisco Systems may be "rebalancing" its business by eliminating 4000 jobs, or about 5 per cent of its workforce, but it'll keep its hands off its hot new security acquisition, Sourcefire.

The company said in a letter to Sourcefire management on Thursday that the planned job cuts, announced on Wednesday, would not affect their employees. The letter was disclosed in a filing to the U.S. Securities and Exchange Commission. Cisco agreed to buy Sourcefire last month for US$2.7 billion and expects to close that deal later this year.

Cisco announced its latest belt-tightening on a call to discuss its fourth-quarter financial results. The move will speed up Cisco's decision-making and execution and help it focus on key businesses, plus deal with uneven economic growth around the world, Chairman and CEO John Chambers said.

But the Sourcefire deal itself is part of Cisco's renewed focus on a short list of key priorities, which include security as well as data center and cloud infrastructure, software, services and video. Sourcefire offers open-source intrusion detection and prevention technology that Cisco wants to include in a security architecture delivered through networks.

Sourcefire has about 650 employees. Cisco said when the deal was announced that it was buying the company for its open-source community and its employees, and that Sourcefire's leaders and employees would become part of the Cisco Security Group.

Cisco's stock (Nasdaq: CSCO) plunged $US1.91 to $US24.47 on Thursday, a drop of more than 7 per cent, after the company gave a weak revenue forecast for the current quarter. Though Cisco posted solid revenue and profit gains for its fiscal fourth quarter ended July 28, it forecast revenue growth of just 3 percent to 5 percent for the current quarter. That would barely hit Cisco's long-term goal of boosting revenue by 5 percent to 7 percent per quarter. Chambers said Cisco was still committed to that long-term target.

Stephen Lawson covers mobile, storage and networking technologies for The IDG News Service. Follow Stephen on Twitter at @sdlawsonmedia. Stephen's e-mail address is stephen_lawson@idg.com

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Stephen Lawson

IDG News Service
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