Cisco will lay off over 4000 employees!

Source: Core Third Board

    Another tech giant joins the ranks of layoffs!

    On February 14th, Cisco announced its latest quarterly financial report and announced plans to lay off 5% of its workforce, reaching thousands, as part of a company wide restructuring. The main reason is that customers are still in the "de inventory" stage, which leads to Cisco‘s conservative view of its operational outlook.

    According to Cisco‘s latest annual report, the company has nearly 85000 employees, which means more than 4000 employees may be affected by layoffs. The layoffs will start this year and continue until next year, with employee severance pay and other termination benefits resulting in a total loss of nearly $800 million for the company.

    The layoffs were not only affected by customer inventory, but also due to Cisco‘s less than ideal performance and next quarter financial forecast.

    According to financial report data, Cisco‘s revenue for the second quarter was $12.8 billion, a year-on-year decrease of 6%. Net profit decreased from 2.77 billion US dollars in the same period last year to 2.63 billion US dollars. GAAP earnings per share were $0.65, a year-on-year decrease of 3%, while non GAAP earnings per share were $0.87, a year-on-year decrease of 1%. In terms of financial forecasts, Cisco predicts a revenue range of $12.1 billion to $12.3 billion in the third quarter, far below the widely estimated $13.1 billion on Wall Street.

    Cisco CEO Charles Robbins admitted at the financial report meeting that due to the continued weak demand, telecom and cable service provider customers are still quite conservative in placing orders, so they have a conservative view of short-term operational performance.

    Third Bridge analyst Joe Brunetto analyzed that due to customers needing some time to liquidate inventory, Cisco operations may have to wait until the second half of 2024 or early 2025 to see the light of the day.

    However, in the context of declining revenue, Cisco has shifted its focus to the thriving artificial intelligence industry. Last September, the company announced its acquisition of machine learning and cybersecurity company Splunk, with a transaction value of 28 billion yuan. This network hardware and software manufacturer announced on Wednesday that it plans to shift its focus to "key priority areas" such as artificial intelligence.

    Cisco CEO Chuck Robbins stated in the company‘s Q2 financial report, "We will continue to adjust our investments based on future growth opportunities. Our innovation is at the center of an increasingly interconnected ecosystem and will play a crucial role in our clients adopting artificial intelligence and ensuring their organizational security processes."

    Cisco‘s layoffs come amidst a wave of layoffs in the technology industry, with Google, Amazon, PayPal, and others recently announcing layoffs.