In a move aimed at focusing on high-growth sectors, network giant Cisco is gearing up for a significant restructuring, potentially leading to thousands of job cuts, Reuters news report said.
The San Jose, California-based company, boasting a workforce of 84,900 employees as of fiscal 2023, is deliberating on the scale of the layoffs.
An official announcement regarding the restructuring is anticipated as early as next week, coinciding with the company’s upcoming earnings call scheduled for Feb. 14. Cisco had previously undergone restructuring in November 2022, affecting approximately 5 percent of its workforce and resulting in $600 million in severance and associated charges.
The job cut at Cisco aligns with a broader trend within the tech industry, as evidenced by the recent workforce reductions at telecom giants Nokia and Ericsson in an effort to streamline operations and reduce costs.
Moreover, several prominent tech firms, including Amazon, Alphabet, and Microsoft, have initiated layoffs in recent weeks.
Cisco recently reported first quarter results for the period ended October 28, 2023. Cisco reported first quarter revenue of $14.7 billion, net income of $3.6 billion or $0.89 per share.
Cisco earlier informed that it saw a slowdown of new product orders in the first quarter of fiscal 2024 and believes the primary reason is that customers are currently focused on installing and implementing products in their environments following exceptionally strong product delivery over the past three quarters. Cisco estimates there are one to two quarters of shipped product orders still waiting to be implemented by its customers.
Cisco’s decision comes on the heels of a downward revision in its full-year revenue and profit forecasts during its previous earnings call, signaling a slowdown in demand for its networking equipment. The company attributed this weakness to a decrease in orders in the first quarter, citing customer focus on product installation and implementation within their environments.
Hence, Cisco was targeting to achieve revenue of $12.6 billion – $12.8 billion with 31.5 percent – 32.5 percent operating margin for the second quarter of fiscal 2024. For its fiscal 2024, Cisco was targeting to achieve revenue of $53.8 billion – $55.0 billion.