American networking giant, Cisco Systems has announced a reduction of 5% in its worldwide workforce, equating to over 4,000 job cuts, while also revising its annual revenue target.
The company is adapting to challenging economic conditions that have prompted numerous layoffs across the tech sector this year.
Following this announcement, shares of the networking equipment maker experienced a decline of over 5% in extended trading on Wednesday.
Cisco has adjusted its revenue forecast to a range between $51.5 billion and $52.5 billion, down from the previous projection of $53.8 billion to $55 billion.
“We also continue to see weak demand with our telco and cable service provider customers,” CEO Charles Robbins said in a conference call.
The accumulation of networking hardware inventory is anticipated to subside in the second half of 2024 or early 2025, as noted by Joe Brunetto, an analyst at Third Bridge.
In the interim, Cisco is directing its efforts toward artificial intelligence and collaborating with Nvidia to stimulate growth. Cisco’s CEO, Robbins, mentioned a strategic partnership wherein Nvidia will integrate Cisco’s ethernet with its widely used technology in data centers and AI applications.
Cisco’s projected third-quarter revenue, ranging between $12.1 billion and $12.3 billion, falls short of estimates at $13.1 billion, according to LSEG data.
In response to restructuring and a focus on high-growth areas, Cisco, with 85,000 employees, is planning layoffs.
According to Reuters, the company will incur an $800 million charge before tax for severance and related costs, with the majority of the charges expected to be recognized in the first half of fiscal 2025.
