Networking giant Cisco Systems has announced plans to lay off approximately 7% of its global workforce as part of a strategic shift towards high-growth areas such as artificial intelligence and cybersecurity. This move marks the company’s second major round of job cuts in 2024.
The 7% reduction equates to around 6,000 employees based on Cisco’s reported workforce of 84,900 as of July 2023. Earlier this year, the company laid off 4,000 workers in February.
Despite a 10% year-over-year decline in quarterly revenue to $13.64 billion, Cisco’s performance exceeded market expectations of $13.54 billion. The company stated that the restructuring plan aims to enable investments in key growth opportunities and drive efficiencies in its business. Cisco anticipates pre-tax charges of up to $1 billion related to the restructuring, with $700-800 million to be recognized in the first quarter of fiscal 2025.
CEO Chuck Robbins expressed confidence in Cisco’s future, highlighting a rebound in demand for the company’s networking equipment. Robbins mentioned that the inventory digestion phase is complete, and Cisco is now transitioning to a more normalized demand environment.
Amidst the layoffs, Cisco is focusing on capitalizing on emerging technologies by committing $1 billion to invest in AI startups and acquiring cybersecurity firm Splunk for $28 billion. As part of the restructuring, Cisco plans to merge its networking, security, and collaboration departments into a single organization.
The company has forecasted first-quarter revenue to be between $13.65 billion and $13.85 billion, surpassing analyst projections. Cisco’s strategic realignment underscores its commitment to innovation and adaptability in the ever-evolving tech landscape.
