Cisco Systems has announced a 7 percent cut in its global headcount — affecting nearly 6,000 employees — to focus on high-growth areas such as AI and cybersecurity.
The US-based enterprise networking company did not specify the number of jobs it is cutting. Cisco Systems had 84,900 employees as of July 2023. Based on that figure, the number of jobs cut would be about 5,900.
In February, Cisco Systems said it would cut 5 percent of its global workforce or more than 4,000 jobs. This means, Cisco would slash around 10,000 jobs in two rounds of job reduction.
The San Jose, California-based company estimates it will recognize pre-tax charges of up to $1 billion in connection with the restructuring plan, with $700 million to $800 million of these being recognized in the first quarter.
Innovation
Top management of Cisco Systems is focusing on product innovation and new strategies for signing new contracts with its customers.
Cisco purchased cybersecurity firm Splunk for $28 billion, in its biggest-ever deal, to boost diversification and capitalize on the AI boom to drive revenue. Splunk has contributed revenue as well.
But Cisco has reported 10 percent drop in total revenue to $13.64 billion for the fourth quarter ended July 27. Splunk contributed approximately $960 million of total revenue for the fourth quarter of fiscal 2024.
The business performance of Cisco in all the regions is indicating that Cisco needs more innovation in its product strategy. Cisco’s revenue was $8,068 million (down 11 percent) in Americas, $3,511 million (down 11 percent) from EMEA, and $2,064 million (down 6 percent) in Asia Pacific that include Japan, China and India.
Networking revenue
Cisco reported revenue of $6,804 million (down 28 percent) from networking, $1,787 million (up 81 percent) from Security, $1,019 million (flat) from Collaboration, $248 million (up 41 percent) from Observability and $3,784 million (up 6 percent) from Services.
In fiscal 2024, Cisco revenue was $53.8 billion, a decrease of 6 percent. Splunk has contributed $1.4 billion of total revenue for fiscal 2024.
CEO Chuck Robbins said on an analyst call: “In our fourth quarter, we saw steady customer demand with order growth across the business as customers rely on Cisco to connect and protect all aspects of their organizations in the era of AI.”
Cisco has been working to reduce its reliance on its massive networking equipment business, which has struggled due to supply-chain disruptions and a slowdown in post-pandemic demand, Reuters news report said.
Deal achievements
Cisco added over 230 new customers for XDR security solutions in Q4.
Cisco signed several $100 million-plus transactions in the quarter with global enterprises.
In terms of product orders, Americas was up 15 percent, EMEA was up 12 percent, and APJC was up 16 percent. In terms of customer markets, public sector was up 20 percent, enterprise was up 13 percent, and service provider and cloud was up 5 percent.
Excluding Splunk, security product orders grew double digits. Collaboration product orders grew double digits. In networking portfolio, data center switching also saw a double-digit product order growth. Orders for enterprise routing, campus switching, and wireless were also strong, with wireless orders greater than 1 million, up more than 20 percent, as customers look to enhance office environments.
AI focus
Cisco says 2,200 customers are using its AI assistant and security. Cisco has crossed $1 billion in AI orders with web scale customers to date, with three of the top four hyperscalers deploying ethernet AI fabric, leveraging Cisco-validated designs for AI infrastructure. Cisco expects an additional 1 billion of AI product orders in fiscal year 2025.
Cisco expects first-quarter revenue in the range of $13.65 billion and $13.85 billion.
Baburajan Kizhakedath