Next week Cisco Systems Inc. will announce staff reductions as part of a restructuring designed to redirect efforts to achieve results in more promising areas. This became known to Reuters from a number of informed sources. The restructuring and accompanying cuts will be announced either during the quarterly report on February 14 or a day or two before.
As of fiscal year 2023, its total headcount was 84,900, according to the company’s website. The company previously laid off 4,100 employees, or about 5% of its workforce, as part of a restructuring announced in November 2022.
Last November, the company defied analysts’ expectations to report a 6.6% drop in revenue and a slight decline in adjusted earnings per share instead of growth in its fiscal second quarter, which ended Jan. 28, 2024. The company attributed the weaker forecast to a slowdown in the growth rate of product orders in previous months, mainly from cloud providers and other large customers who reduced purchases. It is reported that they have not yet implemented the products purchased in 2023.
During its latest quarterly report, CEO Chuck Robbins told investors that the company is working to “expand capabilities in high-growth areas.” He called the acquisition of Splunk for $28 billion one of the steps in this direction, which will make a powerful breakthrough in the field of software and data analysis based on AI.
Robbins named the AI infrastructure market, especially Ethernet network equipment, as another area of growth. According to him, as of November 2023, the volume of Cisco customer orders for such infrastructure could exceed $1 billion. Robbins said then that the company is working on reference solutions that will combine its network equipment with accelerators and storage systems developed by partners. Recently, Cisco and NVIDIA announced the expansion of cooperation.
We add that in the second quarter the company predicted adjusted earnings of $0.82 to $0.84 per share on revenue from $12.6 to $12.8 billion. In general, in the 2024 financial year, Cisco forecasts sales volumes of $53.8 to $55 billion (decrease from previously expected $57–58.2 billion).
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