Cisco Systems announced that it would eliminate over 4,000 jobs, or 5% of its global workforce, and lower its annual revenue target as the company navigates a challenging economic climate that has resulted in thousands of tech sector layoffs this year.
The manufacturer of networking equipment saw a more than 5% decline in its shares during extended trading on Wednesday after Cisco lowered its prior prediction from $53.8 billion to $55 billion to $51.5 billion.
Cisco CEO shares details
CEO Charles Robbins stated during a conference call, "We also continue to see weak demand with our telco and cable service provider customers."
Analysts predict that the telecom industry's clients will continue to curtail expenditure and prioritize getting rid of their surplus inventory of networking hardware, which would put pressure on demand for Cisco's goods. According to Joe Brunetto, an analyst at Third Bridge, the networking gear inventory backlog should be cleared up in the second half of 2024 or the first quarter of 2025.
To spur growth, Cisco is concentrating on artificial intelligence and its collaboration with Nvidia. According to CEO Robbins, Nvidia consented to utilize Cisco's Ethernet with its widely-used technology in AI applications and data centers.
Cisco’s latest revenue
According to LSEG statistics, Cisco forecasts third-quarter revenue of $12.1 billion to $12.3 billion, which is lower than the previously estimated $13.1 billion. The 85-person company was preparing for restructuring and layoffs to concentrate on high-growth areas, three people with knowledge of the situation told Reuters earlier this month.
It anticipates realizing the majority of the $800 million charge related to the layoffs in the first half of fiscal 2025. The charge includes severance and other costs.
Cisco reported second-quarter revenue of $12.79 billion and adjusted earnings of 87 cents per share, both exceeding LSEG forecasts.
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