Trade War Hits Silicon Valley as Cisco Lays Off 5 Percent of Employees in San Jose, Milpitas

Despite quarterly revenues of $13.4 billion, a stock price that hit a five-year high last month and year-over-year growth of 6 percent, Cisco announced that it’s trimming its Silicon Valley engineering staff.

The company is shedding nearly 500 employees—397 at its San Jose headquarters and 91 in Milpitas. It marks the second round of layoffs at the San Jose-based networking hardware maker’s local offices in the past 12 months.

Cisco is Santa Clara County’s largest private-sector employer, with more than 10,000 local employees in multiple South Bay cities.

The company may be a casualty of Washington’s trade war with China, a warning that could ripple through Big Tech. In an earnings call on Wednesday, Cisco CEO Chuck Robbins cited problems problems with state-owned Chinese enterprises. “We’re being uninvited to bid,” Robbins said. “We’re not being allowed to even participate anymore.”

The layoffs were disclosed in a July 30 California Employment Development Department filing. Records show that the company trimmed 1,005 local jobs in 2014, 126 in 2015, 941 in 2016, 709 in 2017 and 462 in 2018.

Cisco’s stock plunged 8.6 percent to $46.25 on Thursday. It was its worst single-day drop since 2013, when its stock lost 11 percent of its value.

Other valley employers filing for layoffs included the San Jose subsidiary of Tennessee’s DBI Beverage Inc., Symantec Corporation of Mountain View, Riverbed Technology in Sunnyvale, Futurewei in Santa Clara, Covia Communities in Los Gatos.

21 Comments

  1. > The company may be a casualty of Washington’s trade war with China, a warning that could ripple through Big Tech.

    Maybe China is stealing Cisco’s intellectual property and using it to make knockoffs of Cisco products.

    • Maybe? The Chinese are the biggest thieves of IP in the world, by far. They’d rather steal than invent.

  2. China’s Vice Premier Liu He had spoken by phone with U.S. Trade Representative Robert Lightizer and Treasury Secretary Steven Mnuchin –and they agreed to talk again in two weeks.

    /China will lose the trade war.

  3. The “Trade War” with China is decades over-due and is working well. I hope President Trump will “Jack-up” the tariffs to 50% or higher.

    If you feel you are being victimized by the tariffs-buy American and you pay “Zero-tariff.”

    President Trump should also be very supportive of the residents of Hong Kong. High-profile support the freedom movement in Hong Kong by placing China on “Notice” to lay off repressive activities against the residents of Hong Kong is imperative to protect U.S. interests and those of our allies in the Pacific rim .

    Failure to do so will place Taiwan in immediate danger-China might want to end “freedoms” in both Hong Kong and Taiwan simultaneously and consolidate their dominance of the South China sea.

    Chinese students should be precluded from all United States Universities and High-Technology companies-for starters.

    David S. Wall

  4. Ten percent of all imports from China in the U.S. are by Walmart. As we know Walmart is a store that caters to lower income people as the little that they have goes further there. Any tariff is paid for by the importer of record as a tax on the goods. The boat can be on the water when the tariff hits and those goods are now subject to any tariff (tax) increase when the boat arrives to our shores. Small business suffers the most as they can’t absorb the 25 percent to now a suggested 50 percent increase on the cost of goods. They go broke over night. This creates a chilling affect on future purchases from China and the orders stop flowing.

    History tells us we always go to war with the country we owe the most to. That would be China. Once war is announced the debt goes away.

    • Trump understands more than any other president that wars are bottomless economic black holes.

      He is changing the mindset and the rules for international competition and confrontation.

      He is shifting from an era of “troops on the ground” to (economic) “offers you can’t refuse”.

      While the Chinese generals admire their vast parades of troops in perfect synchronization and fearsome hardware, the Chicom leaders are sh*tting their pants worrying about how they are going to keep hundreds of millions of peasants OUT of the big cities and out in the provinces at jobs making things to export.

      The sly smile on Trump’s face is the knowledge that he has the Chicom’s by the sensitive parts.

      American retailers can get Christmas toys from a zillion different places. But the Chicom’s need customers with cash. BIG CUSTOMERS WITH LOTS OF CASH.

      From the ChiCom perspective, a deal with Trump is far better then mobs of jobless peasants swarming over burning tanks and occupying the Forbidden City.

      • “Trump understands more than any other president that wars are bottomless economic black holes.”

        Bubbles you certainly hold a lot of faith by using the phrase “Trump Understands” ……. let’s hope that you are right and that I am wrong ……

        • > ……. let’s hope that you are right and that I am wrong ……

          Evidence:

          1. Trump is pulling out of Afghanistan.
          2.Trump had the excuse and the firepower to blow up some Iranian naval hardware after the drone shootdown. Trump concluded that he didn’t have to prove to Iran that he has a big powerful military. He will prove that he has other ways to punish Iran when they are naughty.
          3. When North Korea tested long range missiles, Trump sent long range bombers to buzz around North Korea. Kim Jong Un probably realized that Trump was NOT a paper tiger. Now Trump and Kim are exchanging love notes.

          • We all live in our own little bubble, don’t we ….. Trump is not the leader you may wish that he were. The question we should be asking here, is, …. then who is it that Is doing the leading? Si or no?

  5. “Records show that the company trimmed 1,005 local jobs in 2014, 126 in 2015, 941 in 2016, 709 in 2017 and 462 in 2018.”

    Um, when did this “trade war” start? Fake news?

    • Absolutely Fake News. The headline asserts 100% it was a layoff due to the trade war, then in the article it says it “may” be related. It “may” be related to Santa Clause having the sniffles too. Faker than fake news.

  6. Not sure how the trade war has anything to do with this SJI. China primarily uses Huwaii routers and networking equipment. US mainly uses Cisco. For networking gear, there is nothing going overseas, especially due to various encryption restrictions the US already has in place.

    Also 500 employees out of 20,000 only represents 2.5% of Cisco’s workforce. It’s a policy at IDT to cut the bottom 2% of under performers every year.

    • > It’s a policy at IDT to cut the bottom 2% of under performers every year.

      Yes. Good point. Sometimes, layoffs are “regular” and “routine” and business as usual for human resources.

      Big companies are often are hiring and laying off people at the same time.

      What’s and “IDT”?

      • >What’s and “IDT”?

        Wife used to work for them when they were in Sunnyvale. In the 90’s their big claim to fame was a 486 clone, these days they mostly make sound chips for computers. At some point in the 2000’s they move from Sunnyvale to South San Jose on Silicon Valley BLVD, sort of near the Silvercreek estates.

        Anyways, they’re a worldwide country with offices here, the Philippines and Malaysia.

  7. I will start with I’m not a financier and may not understand this at all. So take it for what it’s worth.

    The tariff money goes into the general fund and if you think about it, the government wants our money no matter how they take it. So either way we would be paying that tax directly as a tax, sales, property, income, etc… instead of an indirect tax based on importation (demand) of products like a tariff.

    In reality Trump raised tax revenue indirectly. However, you (the consumer) can get a break if you buy products made locally. Essentially he raised awareness to the fact that we should support our own products.

    Purely based on the expense of living in CA, Democrats are pro-tax and like to modify behavior through economics, wouldn’t Democrats (and California) support the tariff or is this just more Anti-Trump rhetoric?

    This I do know:
    Cisco does regular layoffs. There are rules about what constitutes a layoff and public announcements. It has to do with the size of company and the number of people effected. I don’t know the details.

    Cisco builds in a bunch of countries and has (or did have) several assembly lines in Penang Malaysia. The tariff is complex and the country of assembly is important. Very few chips are made in China (Japan, Taiwan, Korea are favorites). So some portion of the actual product originated in China would be subject to tariff. What the actual impact of the tariff is on Cisco products is unknown to us common folk and they probably won’t tell us either.

    In my opinion the layoffs are a product of the shrinking market segment that Cisco serves. They are a big company with extraordinary products; however, there are a bunch of other companies that compete with them and are much less expensive.

    Just about every other tech company in the valley is hiring I sincerely wish the best of luck to newly freed talent!

    • Cisco could blow away tomorrow and it wouldn’t affect the 3400 jobs created in the Southbay in May alone. We have insulated ourselves away from manufacturing jobs. We are a design and contract out to other countries kind of manufacturer. We could never live on the wages that these manufacturing countries pay their workers. Nor should we if others live in different economies and have different costs of living. For the most part we are internet and software driven in the makeup of our jobs or job openings. Education is key to success, now and for probably forever. Learn something about something you love to do and you will be successful when you apply those teachings. Meanwhile Trump is taxing the poor again with tariffs, and those of us that can afford the latest Iphone will pay another $300.00 and become poorer in the process.

      • Poor Bruce,
        Crocodile tears, I never hear about Cisco hiring 10,000 new employee, most under contract, always laying off, and its always the latest Republican Presidents fault. China has devalued it’s currency trying to offset the tariffs placed on it’s products keeping most prices right where they were and raising lots of revenue for the beloved tax collecting US government. Walmart shopper rejoice !

        Democrat’s the applause sign is on! More money for all kinds of welfare, free abortions, houses for the homeless, and the Green New Deal.

        I just got rid of my first Flip-Phone and bought new Samsung smart phone at Walmart. Made in some place called Vietnam that makes thing cheaper than China! Didn’t even notice the smell of Walmart shoppers.

        Don’t remember going to war with people we owed money to either. As I recall we give away money called foreign aid to damn near every little hell hole on the planet . Tried to liberate a bunch of others, paid for with our blood.
        Sir!

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