Cisco, a multinational technology company specializing in networking hardware, software, and telecommunications equipment, has announced plans sack 4,000 workers as part of a restructuring initiative.
This is aimed at realigning the business and prioritizing key areas.
The second-quarter results revealed a 6% decline in total revenue, reaching $12.8 billion.
Product revenue experienced a 9% decrease, while service revenue saw a 4% increase.
Revenue downturn extended across regions, with the Americas down 4%, EMEA down 7%, and APJC down 12%.
The restructuring plan is expected to incur pre-tax charges of approximately $800 million, impacting GAAP financial results.
Cisco’s CEO, Charles Robbins, attributed the decision to weak demand, especially from telco and cable service providers, impacting the company’s overall performance.
Analysts foresee continued pressure on Cisco’s product demand due to reduced spending by telecom industry clients.
In response to these challenges, Cisco’s stock fell over 5% in extended trading after the company revised its revenue forecast to $51.5 billion to $52.5 billion, down from the earlier projection of $53.8 billion to $55 billion.
Cisco in its earnings report, said:
“On February 14, 2024, Cisco announced a restructuring plan to realign the organization This restructuring plan will impact approximately 5 percent of Cisco’s global workforce. Cisco currently estimates that it will recognize pre-tax charges to its GAAP financial results of approximately $800 million consisting of severance and other one-time termination benefits and other costs.
“These charges are primarily cash-based. Cisco expects to take the majority of these actions in the third quarter of fiscal 2024 and recognize approximately $500 million of these charges.
“Cisco expects approximately $150 million of these charges to be recognized in the fourth quarter of fiscal 2024, and the remaining amount of these charges primarily through the first half of fiscal 2025.”
