On Wednesday, Cisco, a prominent technology firm in the United States, made a public announcement stating a major workforce reduction plan. The company revealed that they would be laying off approximately 5% of their total workforce which equates to around 4,000 employees. This significant decision was made in light of the company’s latest quarterly results, where both profits and revenues experienced a decline. If we look at the second quarter of the fiscal year, which doesn’t align with the conventional calendar year, Cisco’s profit was recorded at 2,634 million dollars. This was a 5% decline compared to the profit made in the same period the previous year. Furthermore, revenue also took a hit, falling by 6% to 12,791 million dollars, as per the company’s released statement.
As part of their statement, Cisco also shared that they would be undergoing a company-wide restructuring. The primary goal of this realignment is to allow for additional investment in areas deemed as priorities, although the company has not specified what these areas are. This restructuring will directly impact 5% of the company’s workforce, which equates to approximately 4,000 workers out of a total of 85,000 employees.
The bulk of these layoff procedures are slated to take place within the current quarter. The company is expecting to incur costs of roughly $800 million which will cover severance pay and other forms of compensation for the affected employees. Despite these significant changes, Cisco’s half-yearly performance still shows promise. The cumulative profit has seen a 15% increase to $6.272 billion, and revenue has also seen a slight boost of less than 1%, coming in at $27.459 billion. However, analysts have expressed concern over Cisco’s current quarter forecasts, which anticipate earnings per share of $2.61-2.73 and revenue of $12.1-12.3 billion. These figures fall short of analysts’ expectations. Chuck Robbins, the CEO of Cisco, who had initially described the quarter as “solid”, amended his statement during a call with analysts.
