Cisco head gives emphatic thumbs-down to layoffs

John Chambers isn't crazy and he isn't unaware of the market, but Cisco's CEO wanted to make something quite clear Wednesday: Restructuring and realignment, not layoffs, are the path Cisco intends to follow through this crisis.

That could change, of course; anything said in the forward-looking portion of a quarterly earnings call can change as situations unfold. But on its Q2 2009 call this afternoon, Cisco laid out a detailed plan for pursuing revenue opportunities and positioning during the downturn. A hiring "pause" is on tap -- but those dreadful en masse walks to HR are not.

Not that Chambers is prepared to predict the future, answering an analyst's question about the timing of the bottom of the downturn with a simple "I wish I knew." Chambers is known to be a keen observer of the political process, and many of the questions touched on his impressions of the new administration and the stimulus effort. (Short answer: He's impressed, as he is with the way China and India are handling their own economies during this time.)

It wouldn't be shocking for a company like Cisco, which relies heavily on one-off sales rather than ongoing contractual arrangements like, say, Oracle, to feel nervous about the ride, especially with sales in January -- part of Cisco's Q3, currently underway -- declining by one-fifth. (Cisco prefers to be relatively transparent on its quarterly calls, which as Chambers pointed out can be difficult in times like these. But one does it anyway.)

But not only is Chambers "a little more optimistic than most of my customers" (and inclined to think that too much pessimism in these matters can be self-fulfilling), Cisco's currently sitting on $29.5 billion in cash, cash equivalents, and investments. Cisco suggests that it's the largest stash in the industry, and your reporter is hard-pressed to disprove it.

And ahead? A year from now, Chambers says, we're going to have plenty to talk about, especially around Web 2.0 and collaborative technologies. He also sees great potential for installing smart digital infrastructure in the US -- as, he says, Cisco spent the last decade doing elsewhere in the world.

Cisco on Wednesday presented a quarterly report that included solid numbers, with non-GAAP net income of $1.9 billion (32 cents/share), beating market predictions of $9 billion (30 cents/share). Revenue's down 7.5% year-over-year; net income year-over-year was off 21.5%.