Analysts weighed in heavily against Cisco (Nasdaq: CSCO) Thursday morning after the networking giant reduced its growth forecast for coming quarters and said it would cut $1 billion in spending.

Reuters polled analysts who said they expect Cisco to make a substantial number of layoffs.

“Cisco braces for biggest layoffs in its history,” the headline on the story reads.

“Four analysts contacted by Reuters estimated the world’s largest maker of network equipment will eliminate up to 4,000 jobs in coming months, with the average forecast at 3,000,” the news service reported Friday morning. “That would represent 4 percent of Cisco’s 73,000 permanent workers. It also has an undisclosed number of temporary contractors.”

Meanwhile, CNBC’s Jim Cramer in his “Mad Money” show questioned if Cisco’s leadership needs changing.

“Cisco has lost value for a very long time,” Cramer said. “This is the third strike.”

Paul Mansky at Canaccord cut Cisco’s rating and reduced his sales target to $20 from $24.

“Cisco has had challenges executing with a management team that has largely remained intact,” Mansky wrote in a research note.

“With the wholesale shakeup in management structure, we believe execution risk is elevated over the next few quarters, in which the company faces difficult year over year comparisons.”

Citing Cisco’s lack of specifics about coming months other than $1 billion in spending cuts, Mansky wrote: “We view this omission as a next likely ‘shoe to drop.’”

Other analysts reducing Cisco were at Mansky and Baird, according to Marketwatch. Baird cut Cisco to “neutral” from “outperform,” Reuters noted.

In heavy trading with some two times the daily average before noon, shares traded as low as $16.64 from Wednesday’s close of $17.78.

An afternoon rally lifted Cisco back to $16.93 in heavy trading.

The 52-week low is $16.52.

Cisco is one of the Research Triangle Park’s largest tech employees with more than 4,000 workers at its campus in RTP. It’s the second largest concentration of employees for Cisco.

On Wednesday,  Chief Executive Officer John Chambers abandoned a four-year-old forecast for annual sales growth of 12 percent to 17 percent as weak demand and price pressure force him to cut jobs and exit businesses.

Revenue for Cisco, the largest maker of networking equipment, will grow no more than 2 percent this quarter, the company said yesterday on a conference call. Analysts on average expected 7 percent sales growth, according to a Bloomberg survey.

Chambers addressed investors on a conference call for the first time since beginning a retrenchment that has included scrapping the Flip video-camera unit, firing 550 people and overhauling a management structure that slowed decision making. Chambers said he’ll eliminate more jobs this year and cut low- margin businesses. While applauding his candor, analysts said they were left in the dark about the company’s growth prospects.

(Read here for how Chambers plans to make cuts “surgically.”

Read here for more about the earnings report.

“It’s great that they acknowledged the elephant in the room,” said Joanna Makris, an analyst at Mizuho Securities USA Inc. “We all knew 12 to 17 percent wasn’t valid. But what is it — 8 percent, 10 percent? It’s hard for us to know until they tell us which product lines they’re going to exit.”

Technology Bellwether

In the fiscal fourth quarter, which ends in July, profit excluding some costs will be 37 cents to 39 cents a share, and sales will be $10.8 billion to $11.1 billion, Cisco said. Analysts on average had predicted profit of 41 cents and sales of $11.6 billion.

“We’re clearly getting hammered in the public sector, but that’s an area where we need to realign our resources and focus on cloud and collaboration,” Chambers said today in an interview on Bloomberg Television with Betty Liu.

Investors view Cisco as a bellwether for the technology industry because it dominates the market for routers and switches, which direct Internet traffic. Companies buy its switches for corporate networks, while phone and Web-service providers typically purchase Cisco’s more-expensive routers.

As part of a management restructuring announced this month, Cisco began taking apart a bureaucracy that investors and former employees said slowed decisions, fueled market-share losses and led to an exodus of senior executives. Cisco said it reduced the number of councils, which were responsible for management, to three from nine, and the number of boards that reported to them to 15 from 42.

It also said it would eliminate $1 billion in costs in the next fiscal year, aiming to improve profitability.

‘Completely Committed’

“We do not underestimate the transition in front of us,” Chambers said yesterday on the call. “We are completely committed as a leadership team to make the required fundamental changes to our operating model.”

Still, the changes have yet to reassure investors that Cisco is back on track, said Bill Kreher, an analyst at Edward Jones & Co.

“It appears that this turnaround may take a little bit longer than previously expected,” Kreher said in an interview on Bloomberg Television with Pimm Fox.

Cisco’s shares have declined 32 percent in the past year, compared with a 16 percent gain in the Standard & Poor’s 500 Index. The company struggled to maintain historic levels of profitability amid an expansion into more than 30 side businesses such as smart grids, home networking and digital music hosting.

Rivals Move In

The broadened ambitions let rivals such as Hewlett-Packard Co. (HPQ), Huawei Technologies Co. and Juniper Networks Inc. (JNPR) encroach on key markets. In ethernet switches, Cisco’s share dropped to 67 percent last year from 69 percent in 2006, according to IDC, a market-research firm in Framingham, Massachusetts. In routers, Cisco’s share dropped to 55 percent last year from 66 percent.

“Cisco took advantage of some utopian conditions in the last decade,” said Mark Fabbi, an analyst at Gartner Inc. Now, “companies are getting smart and forcing Cisco to earn their business again.”

Chambers first said in August 2007 that revenue would rise 12 percent to 17 percent a year amid rising demand for Cisco’s products. He said yesterday that the forecast is “off the table.”

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