Cisco Cutting Jobs Yet Again After Disappointing Fourth Quarter

Networking company Cisco has announced another round of job cuts. The company plans to lay off 7% of its global workforce, which is in addition to the 5% cut earlier this year. While Cisco did not provide an exact number, about 6,000 employees will likely be affected.

According to a Cisco report, it has a restructuring plan in place, which will allow it to open up other investment opportunities. Through the plan, the company will see $1 billion in pretax charges, with between $700 million and $800 million resulting in the current quarter.

For the 2024 fourth quarter, which ended on July 27, revenue declined 10% to $13.64 billion. The upcoming quarter won’t be much different as Cisco predicts revenue of $13.65 billion to $13.85 billion. Net income dropped to $2.16 billion, a 45% decline compared to the same period last year.

Sales fell for the third consecutive quarter as demand for routers and switches, Cisco’s core business, has slowed. Supply chain problems have also been plaguing the company. These issues have led to the diversification of Cisco’s business.

Cisco invested $28 billion to buy cybersecurity firm Splunk in a deal that closed in March. The acquisition opens the door to consistent revenue from subscription services instead of relying mostly on one-time equipment sales. With the help of AI technology, Splunk reduces the risks businesses face from hacks through ongoing analysis and monitoring of data.

“As we look to build on our performance, we remain laser focused on growth and consistent execution as we invest to win in AI, cloud and cybersecurity, while maintaining capital returns,” said Cisco CFO Scott Herren, per CNN.

Some internal changes to Cisco’s networking, security, and collaboration units are also on the way. CEO Chuck Robbins announced that the three departments will be consolidated into one organization, with Jeetu Patel taking the lead.

Cisco has earmarked nearly $1 billion for investments in AI companies, specifically Cohere, Scale AI, and Mistral AI. In the last several years, the tech giant has made various acquisitions and investments in other AI startups.