RESEARCH TRIANGLE PARK, N.C. – Cisco workers, brace yourselves. A widely followed Wall Street analyst is reporting that the networking giant could slice its work force by 10 percent later this spring as world IT spending continues to slump along with the rest of the economy.

What a contrast in news over 24 hours: In Seoul, Cisco Chairman and Chief Executive Officer John Chambers outlined plans today for a whopping $2 billion investment in South Korea. In New York on Tuesday, J.P. Morgan analyst Ehud Gelblum projected a “10% headcount reduction” in his Q1 2009 preview of the communications equipment and data networking sector.

Gelblum’s prediction led Cisco to issue a statement Wednesday morning:

“On our fiscal second quarter 2009 earnings call in February we discussed a limited restructuring where we could in the near term see a total reduction of between 1500 and 2000 jobs company wide. This does not represent a broad-scale layoff in our workforce.

“This limited restructuring is part of our ongoing, targeted realignment of resources. While Cisco constantly manages its business priorities, resources and overall employee alignment as part of our overall business management process, we are sensitive to the impact these decisions have on employees during this challenging economic environment. We are doing everything possible to minimize the impact on employees affected by the limited restructuring.”

Were Gelblum’s prediction to come true, 10 percent equals 6,700 employees at “$125k fully loaded cost/employee,” Gelblum wrote. If Cisco doesn’t cut this quarter, it will “sometime soon,” he said.

At the Korea briefing, Chambers said Cisco (Nasdaq: CSCO) wasn’t likely to buy Sun Microsystems, which had been talking with IBM. However, he insisted that his company would continue to be aggressive in making acquisitions. Just last week, Cisco bought Tidal Software for more than $100 million, and as Bloomberg news service notes the company is loaded with cash – $34 billion.

“Cisco moves very rapidly on acquisitions,” Chambers said when asked about Sun. “If we were going to be in an area, we would probably have already moved.”

However, stock watchers may have been more interested in what Gelblum had to say in his analysis, which runs more than 40 pages.

“We expect Cisco to guide F4Q rev down 17-22% y/y, as demand continues to deteriorate, in-line with our estimate for a 21% y/y decline,” Gelblum wrote.

A 22 percent plummet in revenues could trigger a big round of layoffs – something Chambers has said in recent months that he wanted to avoid. Cisco has already put in place a $1 billion savings plan, and a recent round of layoffs did lead to some reductions at its campus in RTP.

Gelblum said plunging revenue may force Chambers to shed more costs – and bodies.

“We believe Cisco could announce a 10% headcount reduction, which we [calculate] could save $900M annually and add 250 [basis points] to [operating] margins, taking margins to the mid-20s,” he explained.

Cisco releases its next earnings report on May 6. J.P. Morgan currently has a “neutral” rating on the stock.

Gelblum forecasts a 24-cent per share profit on revenues of $8.027 billion. The consensus among analysts, the report notes, s a 25-cent profit on revenues of $8.078 billion.

By the way, Cisco also isn’t one of Gelblum’s “favorite” stocks.

“Our favorite stocks longer-term remain Motorola, Qualcomm, Ciena, and F5 Networks,” he wrote.