🔺 What to do when markets are at an all-time high? Find smart bargains, like these.See Undervalued Stocks

Cisco to cut more than 4,000 jobs, lowers annual revenue forecast

Published 02/14/2024, 05:12 PM
Updated 02/15/2024, 01:06 AM
© Reuters. The logo of U.S. networks giant Cisco Systems is seen in front of their headquarters in Issy-les-Moulineaux, near Paris, France August 6, 2022. REUTES/Sarah Meyssonnier/File Photo
CSCO
-
NVDA
-

By Akash Sriram

(Reuters) -Cisco Systems said it would cut 5% of its global workforce, or more than 4,000 jobs, and lowered its annual revenue target as the company navigates a tough economy that has led to thousands of layoffs by tech firms this year.

Shares of the networking equipment maker fell more than 5% in extended trading on Wednesday, after Cisco (NASDAQ:CSCO) cut the forecast to $51.5 billion to $52.5 billion from $53.8 billion to $55 billion, it projected earlier.

"We also continue to see weak demand with our telco and cable service provider customers," CEO Charles Robbins said in a conference call.

Analysts expect demand for Cisco's products to remain under pressure, as clients in the telecom industry restrict spending, prioritizing clearing their excess inventory of networking gear.

The networking hardware inventory pile-up should resolve in the second half of 2024 or early 2025, Joe Brunetto, analyst at Third Bridge said.

Meanwhile, Cisco is focusing on artificial intelligence and partnership with Nvidia (NASDAQ:NVDA) to boost growth. CEO Robbins said Nvidia agreed to use Cisco's ethernet with its own technology that is widely used in data centers and AI applications.

Cisco expects third-quarter revenue between $12.1 billion and $12.3 billion, below estimates of $13.1 billion, according to LSEG data.

The company, which has 85,000 employees, was planning layoffs and restructuring to focus on high-growth areas, three sources familiar with the matter told Reuters earlier this month.

© Reuters. The logo of U.S. networks giant Cisco Systems is seen in front of their headquarters in Issy-les-Moulineaux, near Paris, France August 6, 2022. REUTES/Sarah Meyssonnier/File Photo

It will incur a charge of $800 million on the layoffs before tax consisting of severance and other costs and expects to be recognize majority of the charges in the first half of fiscal 2025.

In the second quarter, Cisco recorded an adjusted profit of 87 cents per share and revenue of $12.79 billion, both above LSEG estimates.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.