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In a recent filing with the Securities and Exchange Commission, Cisco Systems, headquartered in San Jose, California, announced it will cut 7% of its workforce, impacting around 5,500 employees.
The decision marks the second time the tech giant has reduced its employee numbers this year, resulting in thousands of job losses.
Cisco Systems Announces Another Layoff Amid Broader Strategic Shift
A Cisco spokesperson, Robyn Blum, explained via email that the layoffs are part of a broader strategy to focus on areas with high growth potential and enhance operational efficiency.
Although the company has promised full support to those affected, details about severance packages have not been disclosed.
According to AP News, Cisco's workforce was already reduced earlier this year, with approximately 4,000 jobs cut in February. As of July 2023, the company had about 84,900 employees, so this latest reduction will be significant.
The company's decision to downsize aligns with a trend where tech firms cut costs while heavily investing in advanced technologies.
In a blog post on Wednesday, August 14, Cisco CEO Chuck Robbins provided additional context for the layoffs. He mentioned that the company is reorganizing by merging its networking, security, and collaboration teams.
Cisco is also integrating Splunk, a data security and management company it acquired for $28 billion in March. This integration aims to streamline operations and focus on growth areas.
Despite the job cuts, Cisco reported a profit of $10.3 billion for its most recent fiscal year, though total revenue decreased slightly compared to the previous year. For the fiscal fourth quarter ending July 27, Cisco earned $2.16 billion, or 54 cents per share, down from $3.96 billion, or 97 cents per share, in the same period last year.
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Cisco Beats Earnings Estimates
Revenue also fell by 10%, from $15.2 billion to $13.64 billion. Analysts had expected adjusted earnings of 85 cents per share on revenue of $13.54 billion, but Cisco's earnings came in at 87 cents per share, excluding special items.
Looking ahead, Cisco projects adjusted earnings of 86 to 88 cents per share for the upcoming quarter, with revenue expected between $13.65 billion and $13.85 billion.
Reuters says analysts forecast 85 cents per share and revenue of $13.74 billion. Despite recent challenges, analyst David Heger from Edward Jones noted signs of recovery, including a 6% increase in product orders, even excluding those from the Splunk acquisition.
Cisco's decision to lay off employees follows a similar move by Intel Corp., which announced it would cut about 15,000 jobs to remain competitive against rivals like Nvidia and AMD.
After Intel's announcement, its stock dropped, while Cisco's shares rose by 6% after the market closed on Wednesday.
Cisco's recent efforts also include launching a cybersecurity readiness index to help businesses assess their ability to handle cyber threats. This move underscores Cisco's commitment to strengthening its position in the technology sector despite the current economic uncertainties.
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