Cisco may be "rebalancing" its business by eliminating 4,000 jobs, or about 5% 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 yesterday that the planned job cuts, announced the previous day, would not affect their employees. The letter was disclosed in a filing to the US Securities and Exchange Commission. Cisco agreed to buy Sourcefire last month for $2.7 billion and expects to close that deal later this year.
The move is set to 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 centre 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 $1.91 to $24.47 yesterday, a drop of more than 7%, 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 3-5% for the current quarter. That would barely hit Cisco's long-term goal of boosting revenue by 5-7% per quarter. Chambers said Cisco was still committed to that long-term target.