Cisco to cut 7% of its global workforce
The San Jose, California-based company estimates it will recognize pre-tax charges of up to $1 billion in connection with the plan, with $700 million to $800 million of these charges being recognized in the first quarter.
The mass layoffs come on top of another round of cuts Cisco made earlier this year: Cisco had said in February it would cut 5% of its global workforce, or more than 4,000 jobs, while lowering its annual revenue target.
Still, the company’s shares were up 5% in extended trading after it forecast better-than-expected first-quarter revenue on Wednesday.
The company expects first-quarter revenue in the range of $13.65 billion and $13.85 billion, while analysts on average expect $13.71 billion, according to LSEG data.
The company, the largest maker of routers and switches that direct internet traffic, has been grappling with sluggish demand and supply-chain constraints in its mainstay business.
That pushed it to diversify with moves such as its $28-billion buyout of cybersecurity firm Splunk, which it completed in March. The acquisition is expected to reduce its reliance on one-time equipment sales by boosting its subscription business.
“As we look to build on our performance, we remain laser focused on growth and consistent execution as we invest to win in AI, cloud and cybersecurity, while maintaining capital returns,” CFO Scott Herren said in a statement.
The company launched a $1-billion fund in June to make investments in AI startups such as Cohere, Mistral AI and Scale AI. Cisco said at the time it had made 20 AI-focused acquisitions and investments over the past few years.
Cisco reported revenue of $13.64 billion for the fourth quarter ended July 27, compared with an estimate of $13.54 billion.
Its adjusted profit per share was 87 cents, compared with an estimate of 85 cents.
The company's focus on growth includes investing in AI, with the establishment of a $1-billion fund for investing in startups like Cohere, Mistral AI, and Scale AI. Despite the significant pre-tax charges due to restructuring, Cisco's shares saw an increase in extended trading due to its forecast of better-than-expected first-quarter revenue.
