Cisco will slash around 6,500 jobs and sell a manufacturing plant to Foxconn as part of a plan to achieve cost savings of around $1 billion.
The vendor said it will cut around 9% of its total full-time staff - including 15% of its executive-level employees - in a round of layoffs first flagged in May.
The cuts - which Cisco said will affect positions in the US, Canada and “select countries” - include around 2,100 employees who have decided to participate in an early retirement program.
The layoffs are expected to cost the company around $1.3 billion in severance and other packages, which will be expensed over Q4 and fiscal 2012.
An additional 5,000 employees will be transferred to Foxconn through the sale of Cisco's set-top box manufacturing facility in Juarez, Mexico. The transaction – the size of which has not been disclosed – is expected to close by October. No job losses are expected from the sale.
Cisco has been under pressure to streamline its operations and reduce costs in response to increased competition in its core markets.
Dell'Oro in May estimated that Cisco's share of worldwide switching revenue fell nearly 6 percentage points to 68.5% in 1Q11.
The company has already made moves to withdraw from the non-core consumer segment, shutting down the Flip video camera unit it acquired in 2009.