Cisco to cut 7% of global workforce : Market

Cisco plans to reduce its worldwide staff by 7%.

(Nixinfos.com) - Cisco Systems announced on Wednesday that it plans to reduce its worldwide workforce by 7% as it shifts its attention to areas of high growth.

The company anticipates recognizing pre-tax expenses of up to $1 billion due to this strategy, with $700 million to $800 million of these expenses being recorded in the first quarter.

These layoffs are occurring simultaneously with a previous round of reductions at Cisco, which had previously announced in February that it would eliminate 5% of its global workforce, or over 4,000 positions, while also adjusting its annual revenue goals.

Despite these layoffs, Cisco's stock rose by 5% during extended trading following its announcement of stronger-than-expected first-quarter earnings.

The company expects its first-quarter earnings to range from $13.65 billion to $13.85 billion, with analysts on average predicting $13.71 billion, according to data from LSEG.

Cisco, the leading manufacturer of routers and switches that manage internet traffic, is facing challenges due to slow demand and supply chain issues in its core business.

This has led the company to expand its operations through acquisitions, including its $28-billion purchase of cybersecurity firm Splunk in March. This deal is expected to lessen its dependence on one-time equipment sales by increasing its subscription services.

"As we aim to enhance our performance, our focus remains on growth and consistent execution as we invest to secure a position in AI, cloud, and cybersecurity while ensuring we return capital to our investors," said CFO Scott Herren in a statement.

The company also established a $1-billion fund in June to invest in AI startups such as Cohere, Mistral AI, and Scale AI. Cisco has previously acquired or invested in 20 AI-focused companies over the last few years.

Cisco reported revenue of $13.64 billion for the fourth quarter ending July 27, slightly above the expected $13.54 billion.

Its adjusted earnings per share were 87 cents, slightly higher than the expected 85 cents.

Cisco layoffs, Cisco stock, Cisco revenue, Cisco acquisitions, Cisco AI investments,

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