The well-known manufacturer of network equipment, Cisco, has announced plans to fire more than 4,000 workers, or 5% of its 85,000 global workforce. The company’s second-quarter results for January 27, 2024, were released concurrently with this decision. The company explained the layoffs by stating that realigning its business and concentrating on essential priority areas was necessary.
In its earnings report, Cisco reported a 6% decrease in overall revenue to $12.8 billion. Product revenue fell by 9%, while service revenue increased by 4%. There were declines in revenue in all regions as well: APJC saw a 12% decline, EMEA saw a 7% decline, and the Americas saw a 4% decline.
As disclosed in its earnings report, Cisco’s restructuring plan is expected to result in pre-tax charges of about $800 million, primarily in severance and termination benefits. Approximately $500 million in charges are anticipated to be recognized during the third quarter of fiscal 2024, when most of these actions are expected to occur. An additional $150 million in charges will be projected to be recorded in the fourth quarter of the fiscal year 2024, with the remaining amount being distributed over the first half of the fiscal year 2025.
During a conference call after the earnings release, CEO Charles Robbins said that Cisco’s performance has been significantly impacted by the weak demand for its equipment, especially among customers of telco and cable service. After the company revised its forecast from the previously estimated range of $53.8 billion to $55 billion to $51.5 billion to $52.5 billion, Cisco’s shares fell more than 5% in extended trading.
With this move, Cisco is joining the wave of layoffs that have been occurring in the global tech industry since the beginning of the year. Significant job cuts have been announced by major players like Amazon, Microsoft, and Google in 2024, continuing a trend that began in 2023. As of right now this year, more than 70 tech companies have let go of over 32,000 workers, according to Layoffs.
