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By | Rik Myslewski 26th February 2009 23:30

Cisco lays off 250 in first wave of cuts

But don't call them layoffs

Cisco has begun the layoff process it had announced earlier, with approximately 250 people exiting its San Jose, California headquarters this week, along with more throughout its worldwide operations.

The total number of lost jobs isn't clear, according to a report in the Wall Street Journal, but they won't be the only ones the networking leader will shed.

During the company's February 4 financial conference with reporters and analysts, Chairman and CEO John Chambers estimated that the final head-count in this round of layoffs would be between 1,500 and 2,000.

According to Chambers, however, the company's shedding of employees is not a layoff, but instead a "realignment and restructuring of resources to new opportunities."

In a Q&A published in conjunction with the financial report. Chambers responded to a question about layoffs by saying: "Being very transparent, our definition of a company-wide layoff, if we had to do one, probably would be to lay off at least 10 per cent of our workforce. In very direct terms, we are not going to consider a layoff at this point in time."

And so the 1,500 to 2,000 "Cisco family members" - as Chambers called the company's employees in the Q&A - whose jobs will be eliminated won't be laid off. They'll be realigned and restructured.

Cisco has experienced some tough financial times in recent months. Its second-quarter revenue was down down 7.5 per cent from the same period last year. Its net income was down a full 27 percent.

But while those numbers may seem dark, Cisco is still a relatively healthy giant. Before this round of realignment and restructuring, its worldwide workforce numbered 67,000 and on February 4 it reported cash and cash equivalents of $29.5bn (£20.6bn).

However, Chambers believes that the situation will get worse before it gets better, saying that he expects sales to dip as much as 20 per cent in the next quarter.

But that $29.5bn provides one hell of a cushion.

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