Networking gear maker Cisco Systems Inc. is reconsidering plans to take more space in Irvine’s University Research Park as it undergoes dramatic cuts to weather a sharp economic slowdown, according to a company spokesman.
A final decision on the company’s plans to expand in Orange County could come as early as one week from now.
“Real estate-wise, everything is being evaluated,” said Cisco spokesman Derrick Meyer. “Everything comes into play as far as where to cut costs.”
San Jose-based Cisco had been thinking about adding more space to the 70,000 square feet the company already has at University Research Park next to the University of California, Irvine. The current facility houses about 340 workers focused on digital subscriber line products. Back in December, the company and real estate sources said Cisco was looking to lease as much as 150,000 square feet more in the research park.
With space in Silicon Valley still fetching unseen dollar amounts, Cisco had looked to expand its operations in OC, where the company could take advantage of cheaper rents and a skilled workforce.
But now Cisco could join a growing list of companies either severely scaling back or pulling operations entirely out of OC. Texas Instruments Inc. told employees in its Tustin facility this week it planned on moving its OC business back to its Dallas headquarters, resulting in the elimination of 250 local jobs. Earlier this year, Toshiba America Information Systems Inc. pulled its laptop computer assembly operation out of Irvine, eliminating 500 local jobs.
“Other communities are worried about the same thing,” Meyer said.
Cisco also had been considering taking space in Dublin just east of Oakland before it put all expansion plans up on the chopping block.
Cisco plans to write off $800 million as it lays off 8,500 people in order to save $1 billion on a yearly basis. Because of this reduction in staff, Cisco executives said it expected to consolidate its workforce into already existing facilities.
Executives did not mention plans to pull out of more space in OC or whether they would be letting people go locally. But observers say it wouldn’t make sense to add more space when the company is slashing jobs.
“They were in the market place for more space, but my guess as a prudent businessman is that they would reconsider the space,” said Richard Sim, chairman of the Investment Properties Group at The Irvine Company, part owner of University Research Park. “They laid off a lot of people.” n
