Cisco Systems Inc. is set to lay off 7% of its workforce, marking the second round of job cuts this year as the company refocuses on growth areas like artificial intelligence (AI) and cybersecurity. The San Jose-based tech giant, which had 84,900 employees as of July 2023, did not specify the exact number of positions being eliminated, but this cut could affect around 5,900 jobs. Earlier in February, Cisco had already reduced its workforce by approximately 4,000 positions.
This strategic move comes as Cisco looks to invest heavily in AI and cybersecurity—two rapidly growing sectors in the tech industry. In June, the company announced a $1 billion investment in AI startups, including Cohere, Mistral, and Scale, to help build reliable AI-driven products. Additionally, Cisco has teamed up with Nvidia to develop advanced infrastructure for AI systems.
The layoffs follow a similar announcement from Intel Corp., which recently revealed plans to cut 15,000 jobs as it struggles to compete with rivals Nvidia and AMD. Unlike Intel, however, Cisco’s stock rose 6% in after-hours trading on Wednesday following the announcement of its layoffs and quarterly earnings report.
In the cybersecurity space, Cisco launched a cybersecurity readiness index in March, aimed at helping businesses measure their resilience against potential cyber threats.
Cisco’s Earnings Report
For its fiscal fourth quarter ending on July 27, Cisco reported earnings of $2.16 billion, or 54 cents per share, down 45% from $3.96 billion, or 97 cents per share, in the same period last year. Excluding special items, the company’s adjusted earnings stood at 87 cents per share, surpassing analysts’ expectations of 85 cents, according to FactSet.
Revenue, however, declined by 10%, dropping from $15.2 billion to $13.64 billion year-over-year, though it still slightly exceeded expectations of $13.54 billion.
Looking ahead, Cisco is forecasting adjusted earnings of 86 to 88 cents per share and revenue between $13.65 billion and $13.85 billion for the current quarter. Analysts are expecting earnings of 85 cents per share on revenue of $13.74 billion, suggesting Cisco is in line with market expectations.
As Cisco sharpens its focus on AI and cybersecurity, the company is positioning itself for long-term growth, even as it navigates through this challenging period of layoffs.
