Cisco Systems has announced a 7% reduction in its global workforce to focus on high-growth areas such as AI and cybersecurity, as it sees rebounding demand for its networking equipment. The company’s shares were up 5% in extended trading following a positive current-quarter revenue forecast.
CEO Chuck Robbins stated, “Inventory digestion is complete and we’re now returning to a more normalized demand environment.” Cisco is working to reduce its reliance on networking equipment and is restructuring to balance its financial obligations while focusing on growth areas.
The company expects to recognize pre-tax charges of up to $1 billion in connection with the restructuring plan, with a significant portion being recognized in the first quarter. This move aligns with its strategy to invest in software, services, AI, and cybersecurity.
Cisco’s forecast for first-quarter revenue is in the range of $13.65 billion to $13.85 billion, exceeding analysts’ expectations. To accelerate diversification, the company made its largest-ever deal by acquiring cybersecurity firm Splunk for about $28 billion last year and launched a $1 billion fund to invest in AI startups.
In addition, Cisco reported revenue of $13.64 billion for the fourth quarter, surpassing estimates, with an adjusted profit per share of 87 cents. The company’s initiatives reflect its commitment to adapting to changing market demands and driving growth in key technology sectors.
By Juby Babu
