Networking giant Cisco Systems confirmed Friday that it would reduce its workforce of 48,000 employees by up to 8000 workers.
CEO and chairman John Chambers said the cuts would include 2500 to 3000 temporary contract workers and between 3000 and 5000 regular employees. Chambers said the latter would come "through voluntary attrition, involuntary attrition and consolidation of some positions."
Cisco officials said the company anticipates the cutbacks will come with a one-time charge of $US300 million to $400 million occurring by the end of the fourth quarter.
Cisco now has 44,000 regular employees and approximately 4000 temporary workers.
"We're taking these steps because of the continuing slowdown in the US economy and initial signs of a slowdown expanding to other parts of the world," Chambers said in a statement. "We also now believe that this slowdown in capital spending could extend beyond two quarters."
A Cisco spokesperson couldn't be reached for further comment.
Last month, Chambers warned that there could be financially troublesome quarters ahead for the San Jose-based company, due in large part to the drop in spending predicted for the services provider market, where Cisco wants to gain market share.
Chambers also noted last month that what he termed a recession in the US manufacturing sector could adversely affect Cisco this year. US-based manufacturing companies make up about 20 per cent of Cisco's enterprise networking business.
Stan Schatt, an analyst at Giga Information Group in the US, said there was no immediate indication that cuts would be in critical operating areas, such as optical networking, where Cisco is making a big push.
The Cisco announcement came just one day after Intel announced that the slowing economy had forced it to reduce revenue estimates for the first quarter and warned that it would cut 5000 of its 90,000 jobs during the next nine months.