Cisco Systems (CSCO) plans to cut its global workforce by 7%, affecting around 6,000 employees. This decision marks the second significant wave of job cuts in 2024, driven by a 10% drop in quarterly revenue and a strategic realignment towards high-growth sectors such as Cybersecurity and Artificial Intelligence. However, the company has not revealed the exact number of positions that will be terminated.
Reuters reported that the company's shares rose 5% in extended trading following its profitable forecast for current-quarter revenue. "Inventory digestion is complete and we're now returning to a more normalized demand environment," CEO Chuck Robbins informed analysts.
The California-based firm anticipates a recognition of pre-tax charges of around $1 billion related to its restructuring plan, with $700-800 million expected during the first quarter.
The following layoffs enable Cisco to "maintain focus on growth areas such as software, services, AI, and cybersecurity, while balancing its financial obligations and reducing the percentage of hardware in its product mix" as per Michael Ashley Schulman, CIO at Running Point Capital.
The company forecasts first-quarter revenue between $13.65 billion and $13.85 billion, with the midpoint exceeding analysts' average estimate of $13.71 billion, as per LSEG data.
Last year, Cisco took over cybersecurity firm, Splunk in its biggest-ever deal to capitalize on the AI boom, while investing $1B in June in AI startups.
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