Cisco (CSCO) is set to report earnings today after the close, but it is already making news -- and not for the right reasons.
News out this morning from CRN.com suggests that the Cisco is set to announce job cuts of about 20% of its global workforce, which works out to roughly 14,000 jobs going bye-bye at the company.
A lot of investors look upon the job cuts favorably, given that it will lower costs and raise operating efficiencies going forward. That is all true. But I take a diametrically opposed view to this sort of slashing of jobs.
How did management let things get so out of hand in the first place? I mean 14,000 redundancies is not just a casual oversight. I believe it is a sign of mismanagement that the management team has now decided that it has 14,000 jobs it can eliminate.
And this same management team has been taking money from shareholders in the form of fat options and share-grant payouts while letting the company get so bloated? Give me a break.
Besides the 14,000 people and their families that will end up suffering, which is tragic in itself, management must be held accountable to shareholders.
Now to the numbers. The Street expects Cisco to earn $0.60 a share on revenue of $12.6 billion for its quarter ended Jul. 31, 2016. For the current quarter ending in October, Street consensus is for earnings of $0.60 a share, again, on revenue of $12.5 billion.
The company will probably beat estimates by the usual penny or three, take a massive "one-time charge" related to the redundancies and then raise guidance going forward due to the expected savings.
Good luck, whichever way you are positioned going into the earnings event: long, short or agnostic.