Cisco is cutting thousands of jobs, 7% of its workforce, as it shifts focus to AI and cybersecurity

Cisco Systems plans to lay off 7% of its employees second round of job cuts this yearas the company shifts its focus to fast-growing technology areas such as artificial intelligence and cybersecurity.

The San Jose, California-based company did not specify how many jobs it is cutting. In July 2023 it had 84,900 employees. Based on that figure, the number of job losses would be approximately 5,900. In February, Cisco announced it would cut about 4,000 jobs.

The networking equipment maker said in June it would invest $1 billion in tech startups like Cohere, Mistral and Scale to develop reliable AI products. It also recently announced a partnership with Nvidia to develop infrastructure for AI systems.

Cisco’s resignation comes just two weeks after chipmaker Intel Corp. announced this cut approximately 15,000 jobs as it tries to change its business to compete with more successful rivals such as Nvidia and AMD. Intel’s quarterly earnings report disappointed investors and the stock fell after the announcement. In contrast, shares of Cisco rose about 6% after hours on Wednesday.

In a quest to improve cybersecurity, Cisco launched a cybersecurity readiness index in March to help companies measure their resilience against attacks.

Cisco Systems Inc. said Wednesday that it earned $2.16 billion, or 54 cents per share, in the fiscal fourth quarter ended July 27, down 45% from $3.96 billion, or 97 cents per share, in the same period a years ago. Excluding exceptional items, adjusted profit in the last quarter amounted to 87 cents per share.

Revenue fell 10% from $15.2 billion to $13.64 billion.

Analysts on average had expected adjusted earnings of 85 cents per share on revenue of $13.54 billion, according to a FactSet poll.

For the current quarter, Cisco forecasts adjusted earnings of 86 to 88 cents per share on revenue of $13.65 billion to $13.85 billion. Analysts expect earnings of 85 cents per share on revenue of $13.74 billion.

Edward Jones analyst David Heger said Cisco is starting to see demand recover after slowing in recent quarters, noting that product orders are up 6% even excluding orders from the recent numbers. acquisition of cybersecurity company Splunk.

He added that “the restructuring will help offset the earnings impact of interest expense related to financing the Splunk acquisition and rationalize the combined workforce.”