SAN FRANCISCO – Cisco Systems Inc., the world's largest maker of computer-networking gear, is reducing its work force by about 9 percent to reduce costs and raise profits as the company tries to become more competitive.

Monday's announcement to cut 6,500 of its roughly 73,000 worldwide employees follows up on a plan disclosed in May to eliminate thousands of jobs. Two-thirds will come through layoffs, and the rest through an early-retirement plan. The company said 15 percent of employees at or above the level of vice president are being eliminated.

Cisco has long been a high-growth company, but after rebounding from the recession, its sales started stalling about a year ago. Critics have long said that Cisco tries to compete in too many markets.

CEO John Chambers acknowledged that criticism in April and sent employees a memo vowing to take "bold steps" to narrow the company's focus. Cisco killed off its Flip video camcorder business that month, and it reorganized its management structure a month later. Monday's cuts represent Cisco's latest attempt to simplify.

Cisco is also suffering from rising competition from companies like Juniper Networks Inc. and Hewlett-Packard Co. in the market for computer-networking equipment, including the routers and switches that direct the flow of data traffic.

Cisco said the cuts will cost it $1.3 billion in severance and termination benefits. The company, which is based in San Jose, Calif., plans to take the charge over several quarters. It will take $750 million of that, including $500 million for the early-retirement program, during the current quarter.

Cisco will inform employees who have been cut in the U.S., Canada and some other countries during the first week of August. The rest will come later to comply with local laws.

In May, Cisco said it planned to eliminate thousands of jobs as part of a larger plan to lower annual expenses by $1 billion, or about 6 percent. Cisco didn't say then how many jobs would be eliminated, but the number worked out to 4,000 to 5,000 if the percentage of job cuts were similar to the reduction in expenses. The exact number has been the subject of many analyst and published reports since then. The numbers announced Monday are much higher than the 6 percent figure.

Gleacher & Co. analyst Brian Marshall said the cuts were in line with what he was expecting.

"Obviously, while an unfortunate event it's a necessity for Cisco to heal and get back on a competitive stature in the industry," he said.

Also Monday, Cisco said it agreed to sell its Juarez, Mexico-based set-top box manufacturing plant to Foxconn Technology Group, a Taiwanese company that makes many Apple products. The plant's 5,000 employees will join Foxconn by October. Those 5,000 are in addition to the 6,500 being cut from Cisco.

Earlier this year, Cisco cut 550 workers as part of its decision to kill Flip and reorganize other aspects of its consumer business.

Cisco's stock fell 2 cents to $15.42 in extended trading Monday after the announcement. The stock finished regular trading down 15 cents at $15.44.

By Tarmo Virki, European Technology Correspondent

HELSINKI |
Tue Jun 14, 2011 12:33pm EDT

SHANGHAI – China is giving its biggest, state-owned rare earths miner and producer a monopoly for the northern part of the country in reforms aimed at bringing the strategically important sector that's crucial to advanced manufacturing under tighter control.

The Ministry for Industry and Information Technology said in a statement seen Wednesday on its website that Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co.,Ltd, will be the only rare earths producer in the region — China's biggest production base for the exotic metals.

It said 35 other companies would be restructured or closed down by the end of June and that Baotou Steel Rare Earth will handle all mining, processing and trading in Inner Mongolia.

The company was the only company able to satisfy capacity and production requirements of various government ministries, the state-run newspaper Global Times cited Liu Jingchun, a researcher at Inner Mongolia's Economic and Information Technology Commission as saying.

China has abundant reserves and produces 97 percent of the global supply of the 17 rare earth minerals, which have exotic names like dysprosium and terbium and are used in computer disk drives, hybrid car components, weapons and other high-tech products.

To cope with growing demand at home and to reduce environmental damage, China has been reducing export quotas of rare earths over the past several years.

Such moves have raised alarm in importing nations, especially after some in the industry accused China of holding back rare earth shipments to Japan due to a flare up in tensions last year.

SAN FRANCISCO – If he had a another chance, former Google CEO Eric Schmidt would have pressed the Internet search leader to focus more on mounting a challenge to Facebook while he was still running the company.

"I screwed up," Schmidt said late Tuesday during a 75-minute question-and-answer session at the D: All Things conference in Rancho Palos Verdes. The Associated Press watched a webcast of the conference.

Schmidt's admission comes nearly two months after he ended his decade-long stint as Google's CEO and became the company's executive chairman. He was replaced by Google co-founder Larry Page, who is pushing the company's employees to develop more ways to connect people with their friends and family like Facebook already does

That was a priority that Schmidt said he started addressing in internal memos written about four years ago when Facebook had about 20 million active users.

But he acknowledged he and other executives didn't take Facebook seriously enough. Now, Facebook has more than 500 million users who shares billions of links, posts and photos each month.

Facebook's growing popularity is becoming more nettlesome for Google.

As Facebook's audience grows, it is attracting more online advertising and stunting Google's financial growth. Perhaps even more troubling to Google, much of the information on Facebook's website can't be indexed by Google's search engine. That restriction threatens to make Google's less useful as more people form social circles online and could make it more difficult to get a handle on personal preferences so it can do a better job selling ads.

Schmidt said the company has been working hard to solve this "identity" problem. "I think the industry as a whole would benefit from an alternative" to Facebook's network, Schmidt said.

Google has tried to negotiate partnerships with Facebook, Schmidt said, only to be repeatedly rebuffed. He said Facebook has preferred teaming up with another Google rival, Microsoft Corp., which owns a 1.6 percent stake in Facebook. Google also has ties to Facebook; one of its former executives, Sheryl Sandberg, is Facebook's chief operating officer.

Just before Page became CEO, Google introduced its version of Facebook's ubiquitous "Like" button to enable Web surfers to endorse search results and ads. Google's recommendation button, called "+1," is expected to be expanded to other websites Wednesday, according to the Techcrunch blog and industry newsletter Search Engine Land. Schmidt didn't mention a timetable for expanding Google's +1 button.

Google used Tuesday's conference to announce the launch of another networking service that will offer discounts from restaurants and other merchants if enough people agree to buy the coupons. The service, called "Google Offers," is based on the daily deals offered by Groupon, which Google unsuccessfully tried to buy last year. Google's offers initially will be available only in Portland, Ore., before expanding to New York and the San Francisco Bay area later this year. The offers are part of a new mobile payment service Google unveiled last week.

Schmidt views Google and Facebook as part of a powerful "gang of four" that's building influential platforms for selling a variety of products and services to consumers. The others, according to Schmidt, are iPhone and iPad maker Apple Inc. and the Web's biggest retailer, Amazon.com Inc.

Apple once had a close relationship with Google, but Schmidt said things have gotten "rough" between the companies since Google introduced its Android software for mobile phones in 2008. The intensifying competition prompted Schmidt to resign from Apple's board of directors in 2009.

Although he no longer is involved in day-to-operations, Schmidt said he remains a close adviser to Page and is consulted on all key decisions. He spends most of his time traveling to meet with customers, scouting potential acquisitions and meeting government regulators who have been scrutinizing the company's business practices and privacy policies

It's a role that Schmidt, 56, indicated he expects to fill for the rest of his career. He even joked he would like to still be working at Google after he dies if the company could develop the technology to make that possible.

By serving as Google's public ambassador, Schmidt said Page can concentrate on Facebook and other internal issues

"Larry is pretty busy sitting in his office from 9 a.m. to 10 p.m. going through product reviews," Schmidt said.

PARIS – France wants better regulation of the Internet. Google's executive chairman says policymakers should tread lightly and avoid "stupid" rules.

Bridging such differences about how the Internet could or should be more regulated took center stage Tuesday at an "e-G8" meeting aimed to parlay the digital world's growing economic clout into a cohesive message for world leaders at the Group of Eight summit later this week in Normandy.

The two-day Paris gathering has brought together Internet and media world gurus such as Google Inc. executive chairman Eric Schmidt, News Corp. Chairman and CEO Rupert Murdoch and Facebook founder and CEO Mark Zuckerberg. And the discussion includes issues such as protecting children from "evil stuff" on line, preventing illegal downloading of copyrighted materials and shielding Facebook users from unsolicited invitations.

The e-G8 comes amid concerns in the industry that some countries — including several in Europe such as France — have taken measures or enacted laws that could curb Internet freedoms.

French President Nicolas Sarkozy, kicking off the conference, said governments need to lay down and enforce rules in the digital world — even as they need to foster creativity and economic growth with the Internet.

It's unclear whether he'll win over digital executives with this argument, or whether the G-8 summit — which doesn't include countries such as China, a major source of online activity and online regulation — will agree on a single policy going forward.

Sarkozy said he faced mistrust over his push for the "e-G8" when Japan's earthquake, fiscal troubles in Europe, and the Arab world revolutions are likely to dominate the G-8 summit in Deauville on Thursday and Friday. Conflicting visions about the Internet — notably about how regulated it should be — has pitted companies such as Amazon.com and Google against governments about how to protect privacy and copyrights online.

"We need to hear your aspirations, your needs," Sarkozy told hundreds of business executives, creative minds and journalists at Tuileries Gardens in Paris. "You need to hear our limits, our red lines."

Policymakers such as Sarkozy say the blistering pace of growth has often left regulators behind. He said a "balance" needed to be struck to prevent misuse of the Internet — such as to protect children online — while boosting its potential as a driver for economic growth.

While praising the executives, he said regulatory curbs are needed.

"Don't let the revolution that you've begun threaten everyone's basic right to a private life and full autonomy," said Sarkozy. "Full transparency ... sooner or later runs into the very principle of individual freedom."

Google's Schmidt said technological changes have led to a "shift in power" toward individuals — whether to illegally release secret documents or transfer copyrighted material, or rally against their repressive regimes.

"My own opinion is that most governments are having trouble with that shift in power," he said. "So rather than sort of complaining about it, which is what everybody does, why don't we see if we can harness it?"

During an e-G8 panel talk, Schmidt said: "You want to tread lightly on regulating brand new, innovative industries. ... Clearly you need some level of regulation for the evil stuff. But I would be careful about overregulating the Internet.

"I cannot imagine any delegate in this conference (who) would want Internet growth to be significantly slowed by a government that slows it down because of some stupid rule that they put in place," he said.

Last week, the U.N.'s independent expert on freedom of speech said governments that curtail users' access to the Internet are violating a basic human right — regardless of the justification.

Britain last year joined France by announcing it would cut off Internet access to people who illegally download copyright-protected material. The French government has so far issued only warnings under the "three strikes" formula for possible penalties.

Privacy concerns have also raised hackles in Europe.

In January, Facebook and German officials reached a deal over unsolicited invitations sent to nonmembers of the social networking site through its "Friend Finder" feature — which allows Facebook to send email invitations to potential users through current members' address books.

The feature came under fire in Germany for violating privacy laws by allowing unauthorized access to information of third parties. The agreement allows Facebook members more control over the email addresses they share.

Johannes Caspar, a data protection official in Hamburg who negotiated the deal for the Germans, said American laws under which Facebook operates tend to be more laissez-faire than those of Europe about privacy issues.

He said Facebook has cooperated with German investigations about possible privacy law violations, and the onus now is on Europe "to make things clearer" about the rules companies face on the continent.

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Sylvie Corbet in Paris contributed to this report.