One never knows what news might break during an earnings conference call, and that certainly was the case Wednesday when Cisco CFO Frank Calderoni made the following comment as part of his presentation about Cisco’s latest quarter:

“In the past two years, we have managed the business with discipline and focus. In order to execute on the portfolio investment and operational efficiency opportunities that we see in FY ‘14, we are rebalancing our resources with a workforce reduction, which will impact approximately 4,000 employees or 5% of our global workforce.”

Given that Cisco employs some 5,000 people in RTP at what is its largest corporate campus, that’s big news locally. But it’s even bigger news internationally since Cisco is such a bellwether for the tech sector.

Cisco (Nasdaq: CSCO) Chairman and CEO John Chambers said in his earlier introduction that his favorite part of conference calls is the Q&A with analysts. Moments later, an analyst focused immediately on the cuts and a revenue outlook that seemed to run counter to Chambers’ opening statements.

“Frank, thank you very much,” Chambers said following the CFO’s remarks, according to a transcript from financial website Seeking Alpha. “The most difficult decisions we make as leaders are those that impact our employees. However, we will always take the necessary actions to efficiently manage our business for the long run. Consistent with what we have said over the past two years, we are positioning Cisco to accelerate and lead with greater speed, flexibility, and agility. As we closed a very successful fiscal year ‘13, I am very pleased with how we are operating as a company and the value we are delivering to our customers, our partners, our employees, and our shareholders.”

That said, the Q&A began with Tal Liani of Bank of America Merrill Lynch:

“I have a kind of a blunt question if the environment is improving why are you guiding a little bit conservatives and why are you laying off 4000 people which is about 5% of your work force if I understand correctly?”

Liani did.

Chambers launched into a defense of the decision, citing the analyst by name in his lengthy response. (Due to reprint limits, we can’t publish everything Chambers said.)

Chambers’ Response 

“Sure so the environment in terms of our business is improving slightly but nowhere near the pace that we want. You know what product orders have done, minus the acquisition and spin offs because that gives you a feeling for what our growth is going to be and those will bump them up or down. It’s just not growing at the speed we want …

“So, Tal what we see is slow steady improvement but not at the pace we want.

“Now if we’re going to lead in this industry the one thing I have learned over the years is you’re the first mover. We have to very quickly reallocate the resources. So, you know a fair amount of that 4,000 people will be allocated to new growth opportunities.

“The second thing is even though Gary I think you and I would agree we were very pleased with how we made progress in the last two years on speeding up decisions, in today’s marketplace, they’re almost up exponentially on how quickly not only decisions have to be made, but how quickly you implement those. …

“It’s all about speed and pace in this new industry which we intend to balance in. …

“Candidly, we didn’t drive productivity this last year. This is just good business management. …

“But I think Gary given what we want to do on speed and organizational structure and our ability to move fast, you are going to see us target that 4,000 people, we are obviously going to hire that part of them and in other categories and realigned where we need to go for growth.

“So, Tal, that’s a blunt question.

“My key takeaway is I am real pleased with our momentum in the market it just is not growing as fast as we need. And there are enough inconsistencies in the market we think not to remain agile and flexible to be able to grow for our growth markets quickly putting the resources behind that is needed. This is what we strongly believe we will do as a company.”

Meanwhile, reporters hustled to rewrite and update stories.

Their new focus: the layoff bombshell.