Cisco Systems stated that it will reduce 5% of its global workforce and cut its annual revenue target as the company navigates a difficult market that has resulted in thousands of layoffs by tech giants this year.
Cisco Systems announced that it will slash 5% of its global workforce, or more than 4,000 jobs, and lower its annual revenue target as the company navigates a challenging market that has resulted in thousands of layoffs by tech firms this year.
Cisco’s shares plummeted more than 5% in extended trading on Wednesday after the company reduced its prediction to $51.5 billion to $52.5 billion from $53.8 billion to $55 billion previously.
“We also continue to see weak demand from our telco and cable service provider customers,” CEO Charles Robbins said.
Analysts predict that demand for Cisco’s goods will stay low as telecom clients reduce expenditures and prioritize clearing their excess networking gear inventory.
According to Joe Brunetto, an analyst, the networking gear inventory backlog should be resolved by the second half of 2024 or early 2025.
Meanwhile, Cisco is focused on artificial intelligence and is partnering with Nvidia to accelerate growth. According to CEO Robbins, Nvidia has decided to use Cisco Ethernet in conjunction with its own technology, which is widely used in data centers and AI applications.
According to LSEG statistics, Cisco forecasts third-quarter revenue of $12.1 billion to $12.3 billion, which is lower than the previously estimated $13.1 billion.
The corporation, which employs 85,000 people, was mulling layoffs and restructuring to focus on high-growth areas.
It will incur a pre-tax charge of $800 million for layoffs, including severance and other expenditures, and expects to record the majority of the charges in the first half of fiscal 2025.
In the second quarter, Cisco reported an adjusted profit of 87 cents per share and sales of $12.79 billion, both of which were above LSEG expectations.
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