Shares of Cisco (CSCO) opened down sharply this morning, dropping nearly 7% at the market open, following an earnings report that delivered satisfactory earnings but scared investors with the prospect of mass layoffs.

Cisco reported $12.4 billion in revenue, a 6% year-over-year increase, for its fourth fiscal quarter. It booked $.42 in GAAP earnings per share and $.52 in non-GAAP earnings per share. That beat consensus earnings by about a penny, though the revenue was a little bit lighter than consensus.

Cisco shares were trading at $24.70, off $1.68, down 6.5%, at about 9:40 AM ET this morning, just after the market open.

Cisco CEO John Chambers announced on the conference call late yesterday that the company wants to lay off 4,000 people in the next year, a statement that came as a bit of a surprise for most analysts and the investment community. In addition, Cisco executives referred to uneven economic activity across the globe.

“Management referred to the macro environment as inconsistent and cited sources we expected, such as the Asia-Pacific region and one we didn't, U.S. service providers,” wrote Raymond James analyst Simon Leopold in an investor note this morning. “The macro recovery remains choppy for Cisco, and slower growth raises concern.”

But Leopold remains optimistic on the stock, saying once investors get over the shock of the layoffs, cost-cutting will improve the picture. “ We think cost controls keep it on a healthy trajectory.” He maintains a $30 price target on the stock.

Cisco's U.S. service provider revenues came in a little lighter than expected, with weakness in the router and set-top box segments.

MKM analyst Michael Genovese said the uneven performance across the globe was part of the issue in dinging the shares. “As it turned out, the U.S. remained solid overall and EMEA and Federal improved, but issues in Japan, China, Brazil, Russia and parts of Southern Europe restrained the overall order improvement,” he wrote in his investment note.

But Genovese also remains optimistic on the share price, maintaining a $28 target.

“We are disappointed but not overly concerned since we see the slightly lower growth rate as due to macro factors more than company-specific factors.”

For the optimists, the bank account still looks nice. Cisco continues to pile up cash, generating $4.0 billion in cash for the fourth quarter of fiscal 2013, compared with $3.1 billion for the third quarter of fiscal 2013. Cash flows from operations were $12.9 billion for fiscal 2013, compared with $11.5 billion for fiscal 2012.

That means the company's balance sheet now contains nearly $50 billion in cash -- which could give shareholder activists something to chew on. During fiscal 2013, Cisco paid cash dividends of $0.62 per common share, or $3.3 billion. It's possible that people will now ask why the company can't return more cash to shareholders if the company is laying people off and continuing to generate cash.

Interesting, isn't it? Could it be that one Carl Icahn might become more interested in this story?