Cisco cuts 7% of workforce, shifts focus to AI and cybersecurity

CALIFORNIA, UNITED STATES — Networking equipment giant Cisco Systems is laying off 7% of the workforce.
The company has made plans to do so in the wake of focusing its strategy to drive the rapidly growing areas in technology, especially artificial intelligence and cybersecurity.
Currently having a workforce of around 84,900, as of July 2023, the 7% reduction would translate to close to 5,900 jobs lost.
As of February, Cisco had laid off approximately 4,000 jobs, an exercise which had been interpreted to mean that it was yet to effectively realign its structure to meet market needs.
Cisco investment in AI and cybersecurity
In June, Cisco pledged $1 billion to tech startups, including Cohere, Mistral, and Scale, aiming at helping it build reliable AI products. Last month, the company also said it will work with Nvidia to build AI infrastructure systems.
On cybersecurity, the company introduced a cybersecurity readiness index in March to help measure business resilience from attacks.
Financial performance and outlook
Even with the job cuts, Cisco remains quite sound in its financial performance. The company posted earnings of $2.16 billion, or 54 cents per share, in its fiscal fourth quarter that ended July 27.
That is a 45% drop compared with a year ago. On the other hand, Cisco’s adjusted earnings of 87 cents per share beat expectations.
The positive thing, said Edward Jones analyst David Heger, is that Cisco is starting to show signs of recovering from a demand slowdown in its business over the past few quarters.
“The restructuring will help to offset the earnings impact from interest expenses associated with financing the Splunk acquisition and will rationalize combined workforces”, he said.
Industry-wide trend
Cisco’s move to cut jobs as part of the extensive restructuring is not an exception in the technology sector.
Several other technology firms, including Intel Corp., have already announced programs to cut jobs in line with market changes and focus on emerging technologies.
Other tech companies that have cut jobs to embrace AI and automation in a big way include Dell, Accenture, IBM, and Duolingo.