Cisco, the dominant supplier of Internet equipment with 53 percent of the market, stunned Wall Street in early February when it reported below-target December sales. The company moved quickly to shift resources to its most profitable areas and began eliminating about 8,000 full time and temporary jobs. Chambers says Cisco's sales remain slow in the current quarter, partly because of tough markets in Asia and Australia. As a result, the company has undertaken in one month a reshaping of its business that would have taken four or five months under the old economic conditions. Chambers says, adding that companies that fail to act quickly enough may not pull out of the technology industry's downward spiral.
Chambers remains optimistic about the long-term outlook for networking.
The productivity gain for companies is just too great'' for them to ignore the Internet, Chambers says. He indicates that companies that use the Internet see their productivity increase four times more than companies that don't exploit the Web for such things as customer and employee support. This latest round of layoffs is targeted at the company's personal communications sector, which brings the total PCS reductions to 12,000 since December. The cellular phone unit's global team of workers will feel the sting over the next two quarters. The move will enable Motorola to stay competitive and grow its market share, according to Mike Zafirovski, Motorola PCS president.