Cisco has disclosed plans to trim its global employee count by 5 per cent, equivalent to over 4,000 positions, as part of its strategic response to navigating a challenging economic landscape. The decision arrives amidst a broader trend of tech firms grappling with economic uncertainties, leading to significant layoffs across the sector.
The announcement of the job cuts came alongside a downward revision of Cisco’s annual revenue target, now projected to fall within the range of USD 51.5 billion to USD 52.5 billion, down from the previously anticipated USD 53.8 billion to USD 55 billion.
Following this news, Cisco’s shares experienced a decline of more than 5 per cent in extended trading on Wednesday, reflecting investor concerns regarding the company’s outlook.
CEO Charles Robbins cited weakened demand from telco and cable service provider clients as a key factor influencing the revised revenue forecast during a conference call addressing stakeholders. This downturn in demand underscores broader challenges within the telecom industry, where companies are prioritising efforts to reduce excess inventory of networking equipment.
In a strategic move to drive growth amidst these challenges, Cisco is intensifying its focus on artificial intelligence and has forged a partnership with Nvidia, a leading player in the AI space. As part of this collaboration, Nvidia will incorporate Cisco’s ethernet technology alongside its own in data centres and AI applications.
Looking ahead, Cisco anticipates third-quarter revenue to range between USD 12.1 billion and USD 12.3 billion, falling short of analyst estimates which had pegged revenue at $13.1 billion, according to data from LSEG.
In anticipation of the workforce reduction, Cisco expects to incur charges totaling USD 800 million before taxes, covering severance and other associated costs. The majority of these charges are anticipated to be recognised in the first half of fiscal 2025.
