Cisco announces second round of layoffs, impacting 7% of workforce
Cisco, the American multinational technology conglomerate, has announced plans to lay off approximately 7% of its global workforce. The San Jose, California-based company did not disclose the exact number of job cuts. As of July 2023, it employed 84,900 people. The company disclosed this information in a recent filing with the US Securities and Exchange Commission (SEC). This is the second round of layoffs for Cisco in 2024, following an earlier reduction of nearly 4,000 employees in February.
Restructuring plan aims to drive business efficiency
The layoffs are part of a broader restructuring plan aimed at driving business efficiency and investing in key growth opportunities. "Cisco announced a restructuring plan to allow it to invest in key growth opportunities and drive more efficiencies in its business," the company stated. The tech giant expects this initiative will result in cost savings of approximately $1 billion through job cuts and other measures.
Cisco's financial outlook post-restructuring
Cisco anticipates recognizing charges of around $700 million to $800 million in the first quarter of fiscal 2025, due to severance and other one-time termination benefits. The remaining amount is expected to be recognized throughout the rest of fiscal 2025. Despite a 45% drop in its fiscal fourth-quarter earnings compared to last year, Cisco's shares saw an after-hours increase of about 6% following this announcement.
Cisco's strategic investments in AI and cybersecurity
In recent years, Cisco has been actively investing in artificial intelligence (AI) and cybersecurity. In June, the company committed $1 billion to invest in AI startups including Cohere, Mistral, and Scale. Additionally, it partnered with NVIDIA to develop advanced infrastructure for AI systems. Earlier this year, Cisco also launched a cybersecurity readiness index to help businesses assess their vulnerability to cyberattacks.
Cisco's acquisition of Splunk and future plans
Cisco completed a $28 billion acquisition of cybersecurity firm Splunk in March, aiming to reduce its reliance on one-time equipment sales by boosting its subscription business. The company has set a target of $1 billion worth of AI product orders in 2025. Edward Jones analyst David Heger believes that "the restructuring will help offset the earnings impact from interest expenses associated with financing the Splunk acquisition and will rationalize combined workforces."
