Source- BNN Breaking
Tech Giant to Cut 5% of Workforce, Eliminating 4,250 Jobs
In a move to streamline operations amidst a challenging industry landscape, Cisco, one of the leading technology companies, has announced plans to reduce its workforce by 5%. This decision will result in approximately 4,250 job cuts, contributing to a significant downsizing trend seen across the tech sector. The news has had an immediate impact on Cisco’s stock, with shares declining by as much as 9% in extended trading.
Industry-Wide Downsizing in 2024
Cisco’s decision reflects an industry-wide trend, as tech companies continue to implement cost-cutting measures in response to the market downturn that began two years ago. January marked a particularly active month for job cuts in the sector, with major players like Alphabet, Amazon, Microsoft, SAP, eBay, Unity, and Discord all announcing layoffs. According to Layoffs.fyi, 144 tech companies have already laid off nearly 35,000 workers in 2024.
Financial Performance and Guidance Challenges
Cisco’s workforce reduction comes on the heels of a 6% year-over-year decline in revenue for the quarter ending on January 27. The net income also experienced a dip, falling to $2.63 billion, or 65 cents per share, from $2.77 billion, or 67 cents per share, in the same period last year. The company attributed part of the challenging financial environment to delays in finalizing the $28 billion acquisition of monitoring and security software maker Splunk.
Cisco Is Cutting 5% of Workforce
CEO Chuck Robbins, in a conference call with analysts, provided guidance for the fiscal third quarter, calling for adjusted earnings per share between 84 to 86 cents on $12.1 billion to $12.3 billion in revenue. These figures fell short of analysts’ expectations, who were anticipating adjusted earnings of 92 cents per share on $13.09 billion in revenue.
For the full year, Cisco anticipates adjusted earnings per share in the range of $3.68 to $3.74 and revenue between $51.5 billion to $52.5 billion, below analysts’ projections of $3.86 in adjusted earnings per share and $54.26 billion in revenue.
Challenges and Caution in a Shifting Environment
During the conference call, Robbins acknowledged challenges impacting the guidance, citing a cautious approach due to heightened uncertainty in the macro environment. Additionally, customers are taking more time to deploy products received in recent quarters, contributing to slower-than-expected progress. Demand remains sluggish among telecommunications and cable service provider clients, adding further complexity to Cisco’s outlook.
Despite these challenges, Cisco announced a slight increase in its dividend, raising it by a penny to 40 cents per share. The company now faces the task of navigating a changing landscape while aiming to maintain its competitive edge in the technology sector.
