Cisco Systems has announced a reduction of its global workforce by 5%, equivalent to over 4,000 employees, and revised its annual revenue target downwards. This decision comes as the company navigates a challenging economic environment, resulting in layoffs across the tech industry this year.
Shares of the networking equipment maker declined over 5% in extended trading following the downward revision of its forecasted revenue range to $51.5 billion to $52.5 billion. This adjustment comes after initially projecting a range of $53.8 billion to $55 billion.
In 2023, it sacked 85,000 employees
Ending the previous year with almost 85,000 employees, Cisco is facing continued pressure on demand for its products as clients within the telecom industry reduce spending and prioritise clearing excess networking gear inventory.
Analysts anticipate the surplus inventory of networking hardware to be addressed by the second half of 2024 or early 2025. In the meantime, Cisco is focusing on artificial intelligence, partnering with Nvidia to stimulate growth. Nvidia has agreed to integrate Cisco’s ethernet alongside its own technology, extensively used in data centers and AI applications.
Cisco expects third-quarter revenue to range between $12.1 billion and $12.3 billion, falling short of estimates. The company anticipates incurring an $800 million charge for the layoffs before tax, covering severance and other costs. Most of these charges are expected to be recognised in the first half of fiscal 2025.
