Cisco and job cuts: Will they or won't they?

Cisco made news Wednesday when CEO John Chambers stated repeatedly his company would resist the trend toward big layoffs -- welcome news to beleaguered tech folk. But the days that followed were spent pondering what the heck he meant.

The math's telling. Cisco currently employs around 67,000 people. Current restructuring efforts, underway for around a year and a half, will eliminate perhaps as many as 3,000 of those positions, or 4.4%. A thousand are already gone.

It's fair to ask if those 2,000 employees aren't just as unemployed post-restructuring as they would be post-layoff. (More about that in a moment.) On the other hand, if you're sitting where Chambers sits, cutting less than 5% is a lot easier to face than cutting 18%, as he was compelled to do in March 2001 as the dot-com bust fleshed itself out -- or the cuts he made back at Wang, where Chambers worked in the 1980s and where he found himself making five rounds of layoffs in 15 months. Those cuts are, he has said in the past, one of the reasons he lost confidence in that company and eventually moved on. Chambers himself has defined a major layoff as more than 10% of the workforce.

And layoffs at Cisco tend to operate a little differently than they do elsewhere. After the cuts in 2001, Cisco came back to its lain-off Bay Area staffers with an offer: Each could choose six months of severance pay, or could apply for a year-long gig with one of several nonprofits, for which Cisco would pay a third of their previous salary, plus benefits, plus two months severance, plus the possibility of re-applying at Cisco at the end of the year if the jobs were there. Around 80 people took the company up on the Community Fellowship program back then.

Analysts seem to be reacting well as the dust settles. On Friday, investor Mark Faber said in an interview on Bloomberg Radio that he expects several tech stocks with nice cash cushions, Cisco among them, to outperform US Treasuries over the next five to ten years. Outright layoffs could still happen at Cisco; they did in 2001, and after the fact Chambers noted that he'd made even deeper cuts than his advisors had suggested.

For now, though, Cisco's plans seem to be in line which what's known about Cisco's -- and Chambers' -- history. The rest is up to an economy that seems increasingly unfathomable.