Cisco Systems, based in San Jose, California, is planning to lay off 7% of its employees in its second round of job cuts this year. The company did not specify the number of jobs being cut, but based on its current workforce of 84,900 employees, it is estimated to be around 5,900. This move comes as Cisco shifts its focus to rapidly growing areas in technology, such as artificial intelligence and cybersecurity. In February, Cisco announced it would cut about 4,000 jobs, and it recently announced partnerships with tech startups and Nvidia to develop reliable AI products. The layoffs follow similar moves by other tech companies, such as Intel, which announced it would cut 15,000 jobs to compete with rivals like Nvidia and AMD. Despite the layoffs, Cisco’s shares were up about 6% after-hours indicating investor confidence in the company.
In an effort to expand into cybersecurity, Cisco launched a cybersecurity readiness index earlier this year to help businesses measure their resiliency against cyber attacks. Cisco’s fourth-quarter earnings for fiscal 2023 saw a significant drop, with a 45% decrease in net income compared to the same period last year. The company reported earnings of 54 cents per share, down from 97 cents per share a year ago, and revenue fell 10% to $13.64 billion from $15.2 billion. Analysts had expected adjusted earnings of 85 cents per share on revenue of $13.54 billion. Looking ahead, Cisco is forecasting adjusted earnings of 86 to 88 cents per share in the current quarter on revenue of $13.65 billion to $13.85 billion. Analysts are expecting earnings of 85 cents per share on revenue of $13.74 billion.
Edward Jones analyst David Heger noted that Cisco is starting to see demand recover after a slowdown in recent quarters, with product orders up 6% even when excluding those from its acquisition of cybersecurity firm Splunk. Heger believes that the restructuring and layoffs will help offset any earnings impact from interest expenses associated with financing acquisitions and will rationalize the combined workforces of the acquired companies. Despite the challenges in the market, Cisco is optimistic about its future prospects in areas like artificial intelligence and cybersecurity. The company’s strategic partnerships and investments in tech startups reflect its commitment to driving innovation and growth in these key areas of technology.
Cisco’s shift in focus towards AI and cybersecurity is in line with the broader industry trend of investing in emerging technologies to stay competitive in the rapidly evolving tech landscape. With the increasing threat of cyber attacks and the growing demand for AI solutions, companies like Cisco are repositioning themselves to meet the needs of the market. While the layoffs may be a reflection of the company’s efforts to realign its workforce and optimize its operations, Cisco remains a key player in the tech industry with a strong reputation for innovation and product quality. As the company continues to adapt to changing market conditions, investors and stakeholders will be closely monitoring its performance and strategic decisions in the coming quarters.
