Cisco Will Reduce Annual Revenue Forecast and Cut More Than 4,000 Jobs

Cisco Systems said that it will reduce its annual sales goal and lay off more than 4,000 employees, or 5% of its worldwide workforce. The business is navigating a challenging market that has resulted in thousands of layoffs by IT companies this year.

The manufacturer of networking equipment saw a more than 5% decline in its shares during extended trading on Wednesday after Cisco lowered its prior prediction from $53.8 billion to $55 billion to $51.5 billion.

CEO Charles Robbins said on a conference call, “We also continue to see weak demand with our telco and cable service provider customers.”

Analysts predict that the telecom industry’s customers will continue to curtail expenditure and prioritize getting rid of their surplus inventory of networking hardware, which would put pressure on demand for Cisco’s goods.

According to Joe Brunetto, an analyst at Third Bridge, the networking gear inventory backlog could clear up in the second half of 2024 or the first half of 2025.

To spur development, Cisco is concentrating on artificial intelligence and its collaboration with Nvidia. According to CEO Robbins, Nvidia consented to combine its own technology—which is extensively used in data centers and AI applications—with Cisco’s Ethernet.

LSEG data indicates that Cisco is projecting third-quarter sales in the range of $12.1 billion to $12.3 billion, which is less than the $13.1 billion predicted.

Eighty-five-person firm was preparing for restructuring and layoffs in order to concentrate on high-growth sectors, three people with knowledge of the situation told Reuters earlier this month.

It anticipates realizing the bulk of the $800 million charge related to layoffs—which includes severance and other costs—in the first half of fiscal 2025.

Cisco reported second-quarter sales of $12.79 billion and adjusted earnings of 87 cents per share, both above LSEG forecasts.