Cisco Systems plans to lay off 7 percent of its employees, the company announced Monday. second wave of job cuts this yearas the company shifts its focus to faster-growing technology areas, such as artificial intelligence and cybersecurity.
The San Jose, California-based company did not specify how many jobs it would cut. It had 84,900 employees as of July 2023. Based on that figure, the number of jobs cut would be about 5,900. In February, Cisco announced it would cut about 4,000 jobs.
The networking equipment maker announced in June that it would invest $1 billion in tech startups like Cohere, Mistral and Scale to develop reliable AI products. It also recently announced a partnership with Nvidia to develop infrastructure for AI systems.
Cisco’s layoffs come just two weeks after chipmaker Intel Corp. announced it cut about 15,000 jobs The company is trying to turn around its business to compete with more capable rivals like Nvidia and AMD. Intel’s quarterly earnings report disappointed investors, and its stock fell after the announcement. In contrast, Cisco shares were up about 6% after the close Wednesday.
As part of a foray into cybersecurity, Cisco launched a Cybersecurity Readiness Index in March to help businesses measure their resilience to attacks.
Cisco Systems Inc. said Wednesday it earned $2.16 billion, or 54 cents a share, in its fiscal fourth quarter ended July 27, down 45% from $3.96 billion, or 97 cents a share, in the year-earlier period. Excluding one-time items, its adjusted profit was 87 cents a share in the latest quarter.
Revenue fell 10% to $13.64 billion from $15.2 billion.
Analysts on average expected adjusted earnings of 85 cents a share on revenue of $13.54 billion, according to a survey by FactSet.
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 expect earnings of 85 cents per share on revenue of $13.74 billion.
Edward Jones analyst David Heger said Cisco is starting to see demand recover after slowing in recent quarters, noting that product orders were up 6%, even excluding those for its recent acquisition of cybersecurity company Splunk.
He added that “the restructuring will help offset the earnings impact of interest expenses associated with financing the Splunk acquisition and will streamline the combined workforce.”
