Cisco Cuts Thousands Of Jobs, 7% Of Workforce, As It Shifts Focus To AI, Cybersecurity

Cisco Systems plans to lay off 7% of its staff, marking the company’s second round of job layoffs this year, as it switches its attention to faster-growing areas of technology such as artificial intelligence and cybersecurity.

The company in San Jose, California, did not indicate how many jobs are being lost. As of July 2023, it had 84,900 employees. Based on that assumption, the number of employment cuts would be approximately 5,900. Cisco said in February that it would be cutting approximately 4,000 jobs.

Cisco Cuts Thousands Of Jobs, 7% Of Workforce, As It Shifts Focus To AI, Cybersecurity

In June, the networking equipment manufacturer announced that it would spend $1 billion on tech startups such as Cohere, Mistral, and Scale to create dependable AI technologies. It has just announced a collaboration with Nvidia to provide infrastructure for AI systems.

Cisco’s layoffs came just two weeks after chipmaker Intel Corp. revealed plans to shed approximately 15,000 positions as it tried to turn its company around and compete with more successful rivals such as Nvidia and AMD. Intel’s quarterly earnings report disappointed investors, and the company’s shares fell sharply following the news. In comparison, Cisco’s shares rose about 6% after hours on Wednesday.

Cisco launched a cybersecurity readiness index in March to assist organizations in quantifying their resilience against threats.

Cisco Systems Inc. reported Wednesday that it earned $2.16 billion, or 54 cents per share, in its fiscal fourth quarter, which ended on July 27. This is a 45% decrease from $3.96 billion, or 97 cents per share, in the same period a year earlier. Excluding extraordinary adjustments, adjusted earnings per share were 87 cents in the most recent quarter.

Revenue dropped 10% to $13.64 billion from $15.2 billion.

According to FactSet’s poll, analysts expected adjusted earnings of 85 cents per share on $13.54 billion in revenue.

For the current quarter, Cisco expects adjusted earnings of 86 cents to 88 cents per share on revenue of $13.65 billion to $13.85 billion. Analysts predict 85 cents per share earnings on revenue of $13.74 billion.

Cisco Cuts Thousands Of Jobs, 7% Of Workforce, As It Shifts Focus To AI, Cybersecurity

According to Edward Jones analyst David Heger, Cisco is starting to see demand return following a slowdown in recent quarters, with product orders up 6% even after excluding those from its recent acquisition of cybersecurity startup Splunk.

According to him, “the restructuring will help offset the earnings impact from interest expenses associated with financing the Splunk acquisition and will rationalise combined workforces.”

SOURCE | AP