Cisco Confirms It Will Cut More Than 4,000 Jobs

Cisco Systems has confirmed that thousands of its staff are to be laid off, as the networking giant mirrors similar workforce reductions across the tech industry.

Cisco on Wednesday in an earning statement said it would cut 5 percent of its workforce, which works out at roughly 4,250 jobs. The firm currently has approximately 84,900 staff worldwide.

Earlier this week it had been reported that Cisco was planning a major restructuring that involves the loss of ‘thousands of jobs’, as it grappled with a slowdown in corporate spending that has impacted sales growth.

Job losses

Cisco’s confirmation that thousands of people would lose their jobs was revealed in a couple of brief sentences in its second quarter earnings report.

“On February 14, 2024, Cisco announced a restructuring plan in order to realign the organisation and enable further investment in key priority areas,” it said. “This restructuring plan will impact approximately 5 percent of Cisco’s global workforce.”

Cisco also said that it will recognise pre-tax charges of approximately $800 million consisting of severance and other one-time termination benefits and other costs.

In addition to disclosing the job cuts, Cisco’s second-quarter results offered a weak forecast after it lowered its annual revenue target.

Shares of the networking equipment maker fell more than 5 percent in extended trading on Wednesday, after Cisco cut the FY 2024 forecast to $51.5 billion to $52.5 billion, from $53.8 billion to $55 billion, it had projected earlier.

Profit, revenue pressure

Cisco’s results for the second quarter ending 27 January showed that net income had fallen 5 percent to $2.63 billion, from $2.77 billion in the year-ago quarter.

Quarterly revenue meanwhile had declined 6 percent year-over-year to $12.8 billion, from $13.6 billion a year earlier.

“We delivered a solid second quarter with strong operating leverage and capital returns,” said Chuck Robbins, chair and CEO of Cisco. “We continue to align our investments to future growth opportunities. Our innovation sits at the centre of an increasingly connected ecosystem and will play a critical role as our customers adopt AI and secure their organisations.”

“We also continue to see weak demand with our telco and cable service provider customers,” Robbins was quoted by Reuters as telling analysts on a conference call.

The company has yet to close its $28 billion acquisition of software and cybersecurity firm Splunk, that had been announced in September 2023.

Tech sector

Cisco is not alone in cutting thousands of jobs.

The tech sector as a whole of late has been plagued by many layoffs, as tech players seek to reduce their operational costs.

Last October Nokia said it would cut up to 14,000 jobs as part of a cost cutting plan, and earlier in 2023 Ericsson said it would lay of 8,500 employees.

More recently big name tech firms such as Alphabet, Amazon, eBay, Microsoft, Salesforce and TikTok have announced fresh rounds of layoffs, on top of axing thousands of jobs in 2023 and 2022.