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This is the second round of layoffs that the company has announced this year, having cut 5% of its global workforce in February
Cisco has announced that it will cut 7% of its global workforce –approximately 6,000 employees– as it shifts its focus towards higher growth areas, such as AI and cybersecurity.
Cisco acquired software platform company Splunk in 2023 for $157 per share, valuing the deal at approximately $28 billion. Including Splunk employees, Cisco has around 90,000 staff, making the total job cuts around 6,300.
The job cuts were announced in the quarterly earnings call this week, in which Cisco announced revenues of $13.6 billion, a decrease of 10% year on year, with total revenue for the whole 2024 financial year reaching $53.8 billion, a decrease of 6% year on year.
The company has been facing declining revenues and shrinking profits in its core networking business. By reallocating resources, Cisco hopes to bolster its presence in AI and cybersecurity, which are seen as key growth areas for the future.
Large enterprises are increasingly moving their critical computing workloads and applications to the cloud, which reduces the demand for traditional networking hardware, as cloud service providers often use their own infrastructure.
“As we look to build on our performance, we remain laser focused on growth and consistent execution as we invest to win in AI, cloud and cybersecurity, while maintaining capital returns,” said CFO Scott Herren in the call.
The Q4 press release does not go into detail on the job cuts, but an SEC filing confirmed that the company was “restructuring…to allow it to invest in key growth opportunities and drive more efficiencies in its business”.
Cisco currently estimates that the layoffs will cost $1 billion (severance and other one-time termination benefits). It expects to recognize (i.e. account for in financial reports) approximately $700 million to $800 million of these charges in Q1 2025, and the rest later next year.
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