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Cisco boss apologises for slashing jobs

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Cisco boss John Chambers has publicly apologised for the slowdown in the networking giant's business and collapse of its share price which led to massive job cuts last week.

In a highly unusual display of humility, Chambers described a decision which means between 3,000 and 5,000 full time staff and up to 3,000 temporary workers will lose their jobs as "the worst thing I have ever done in my life".

Even while others in the networking industry were announcing a collapse in demand, Chambers remained bullish about Cisco's prospects until an announcement by the networking giant last month that it had failed to meet revenue and profit forecasts for its second quarter.

A slowdown in the US economy and reorganisation amongst US service providers, a key market for Cisco's high-end routers, have hit its sales far more than it first predicted, and caused it to predict that revenue for the next two quarters will also be flat.

Chamber's was at the forefront of Cisco's spectacular rise in the 1990s which saw him hailed as a genius on Wall Street as the firm briefly became the largest company on the planet last year, exceeding the market capitalisation of Microsoft.

Speaking at an investors conference organised by Merrill Lynch in New York, Chambers said he wanted to "apologise for the market and our stock price".

Cisco's share price has dropped 75 per cent from its high water mark last year and is currently been traded at $20.25 per share, against $82 last April. This still means Cisco has a market capitalisation of $14.7 billion but Chambers and his board are mulling a number of financial techniques to increase the firm's value.

Chief among these seems to be the introduction of a share buy-back programme, a common mechanism by firms looking to bolster flagging share valuations.

On a wider scale Chambers is calling for a cut in interests rates by the US Federal Reserve in order to stimulate the economy, the overall slowdown of which he sees as the main reason for Cisco's problems in the market. ®

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