Cisco Systems, the networking equipment manufacturer, has announced a workforce reduction of 5%, equivalent to over 4,000 jobs, and has revised its annual revenue target downwards. The company is adjusting to a challenging economic environment that has prompted numerous layoffs across the tech industry this year. Following this announcement, shares of Cisco fell by over 5% during extended trading on Wednesday. The company has revised its revenue forecast to a range of $51.5 billion to $52.5 billion, down from the previously projected $53.8 billion to $55 billion.
The move comes after Cisco’s latest quarterly numbers and forecast fell short of analysts’ expectations. The company expects its fourth quarter to be slow as customers delay spending due to economic uncertainty.
In a conference call with investors, Chief Executive Officer Chuck Robbins said that the company’s sales have been affected by a “temporary pause” from telecommunications clients as they clear inventory and reassess their equipment needs. “I am confident we can return to growth in the second half of this year once our customers’ purchasing habits revert to normal,” he said.
He also warned that the company’s outlook for 2024 was less confident than last year, as it will face higher operating expenses from its investment in artificial intelligence products. Cisco is also facing stiffer competition from its domestic rivals, including Juniper Networks and Alcatel-Lucent, as well as an increasing threat from Chinese manufacturers such as Huawei.
Cisco’s cuts follow a series of recent announcements by technology companies that have also cut jobs to reduce costs and improve profitability. These include Microsoft, TikTok, and Riot Games, among others. The streamlining has helped boost tech firms’ profits and elevated their stock prices. However, it has also sparked anxiety that the sector has overheated and weighed on the broader U.S. economy, which has kept unemployment near a half-century low.
Cisco, which has 84,900 employees worldwide as of fiscal 2023, is expected to make the bulk of its job cuts in the first quarter of its next fiscal year. It plans to announce the full details of its restructuring plan on February 14, when it will host an earnings call. The company has a market capitalization of more than $140 billion. Its headquarters is in San Jose, California. The company was founded on December 10, 1984, and is headquartered in San Jose, CA.
