Cisco Systems Announces 7% Workforce Reduction Amid Declining Earnings

Cisco Systems Announces Workforce Reduction Amid Industry Challenges

Cisco Systems, a leading manufacturer of computer networking equipment, revealed on Wednesday its decision to implement a significant workforce reduction, cutting 7 percent of its employees. This marks the company’s second major round of layoffs in 2023. While the exact number of affected workers was not disclosed, Cisco reported a total of 84,900 employees as of July 2023, indicating that approximately 6,000 jobs may be eliminated. Earlier in February, the company had already laid off 4,000 employees.

In its latest earnings report, Cisco reported a net income of $2.16 billion for the most recent quarter, reflecting a substantial decline of 45 percent compared to the same period last year. The company’s revenue also decreased to $13.64 billion, down 10 percent. Despite these declines, Cisco managed to outperform Wall Street expectations, resulting in a nearly 6 percent increase in its stock price during after-hours trading.

In line with other major technology firms, Cisco is striving to capitalize on the ongoing shift towards artificial intelligence (AI) within the industry. Historically, Cisco has been one of the largest players in Silicon Valley and even held the title of the world’s most valuable publicly traded company during the dot-com boom. However, in recent years, it has faced increased competition from companies that focus on cloud computing services for large corporate clients.

Nevertheless, Cisco has maintained robust profitability over the years. In March, the company finalized its acquisition of Splunk, a cybersecurity and analytics firm, for a substantial $28 billion.

In a statement released on Wednesday, Chuck Robbins, Cisco’s chairman and chief executive, emphasized the company’s commitment to further integrate Splunk’s capabilities into its product offerings. Additionally, he announced plans to reorganize its departments by merging networking, security, and collaboration into a single division, which will be led by Jeetu Patel. Jonathan Davidson, who served as the general manager and executive vice president of Cisco Networking, will transition to an advisory role under Mr. Robbins.