This week Cisco confirmed its plans to layoff 9 percent of its workforce (6,500 jobs) and to reduce its operating cost by about $1 billion to streamline and focus on the core businesses. Cisco said it will further cut 15 percent of employees in the ranks of vice president and above. 2,100 employees will take early retirement plan under a voluntary program. It has also sold the Scientific Atlanta manufacturing set-top division plant in Juarez Mexico, to Chinese electronics manufacturer Foxconn. The plant manufactures video and telecommunication equipment for the service provider market. The 5,000 Cisco employees working on the plant (about 7% of its total workforce), will be transferred to Foxconn.

Current layoffs, reduction in operating expenses, and selling off business units are all developments in this long-term road to recovery.  The primary focus for Cisco is its restructuring methodology.  Cisco has struggled for growth in recent quarters, gaining widespread attention with the shutting down of its Flip video camera unit, followed by the downfall of its network equipment market share. Severance expenses would cost Cisco nearly $1.3 billion, which include layoffs programs, severance pay outs and termination benefits.

On the sale of its set-top division to Foxconn, Gary Moore, executive vice president and COO, said; “Today’s announcement further simplifies and consolidates Cisco’s manufacturing operations. After working closely with Foxconn for many years, we know they are a strong strategic fit with Cisco’s long-term goals and are committed to a successful future in North America. We remain fully committed to our service provider customers and partners, and will continue investing in existing and new video platforms, including set-top-boxes, as part of our Videoscape vision.”

Despite layoffs and cost cuts, Cisco is planning to go ahead its new security architecture known as SecureX.  “Cisco is committed to our SecureX architecture and our security business,” indicated a Cisco spokesman.

SecureX technology will provide real time protection against user’s network usage. Cisco is working on to adapt SecureX with its firewalls, switches, routers and other products. The program has the ability to dynamically scan and tag data related to a user’s identity and application in order to provide identity-based security policies on a real-time basis. SecureX will safeguard networks from the increasing use of smartphones, tablets and virtualization services.

Cisco is taking radical efforts to cut costs and return its focus to its core routing and switching businesses. Cisco is still a dominant player in consumer technology, video technology and the social technology market, with about $2 billion in sales last year. It also has its big data and cloud computing Unified Computing System program. With all these new and updated initiatives, Cisco is hoping to come back to a strong profitability path.