Cisco Announces 5% Global Workforce Reduction and Financial Results for Q2 2024

Cisco Systems, a leading technology company, recently announced its plans to reduce its global workforce by 5%, which translates to approximately 4,250 employees. This decision comes amidst a trend of cost-saving measures in the tech industry following the market downturn that began two years ago.

The announcement was made in conjunction with Cisco’s second-quarter financial results for the fiscal year 2024. The company reported a decline in revenue of 6% year over year, with net income decreasing to $2.63 billion, or 65 cents per share, from $2.77 billion, or 67 cents per share, in the previous quarter. Despite these results, Cisco’s earnings per share came in slightly above the consensus estimate of 84 cents.

The tech industry has seen a surge in job cuts in recent months, with companies such as Alphabet, Amazon, Microsoft, SAP, eBay Unity, and Discord all announcing layoffs. According to the website Layoffs.fyi, a total of 144 tech companies have eliminated almost 35,000 workers so far this year.

Cisco’s revenue from networking products totaled $7.08 billion, slightly below the consensus estimate of $7.10 billion. The company’s guidance for the third quarter was also lighter than expected, with projected earnings per share of 84 to 86 cents and revenue of $12.1 billion to $12.3 billion. Analysts had anticipated earnings per share of 92 cents and revenue of $13.09 billion.

CEO Chuck Robbins attributed the cautious forecast to the uncertain macroeconomic environment and the longer-than-expected deployment of products by customers. He also noted that there is greater scrutiny of deals due to the high level of uncertainty. Demand remains sluggish among telecommunications and cable service provider clients.

Cisco is yet to complete its $28 billion acquisition of monitoring and security software maker Splunk, which was announced last year. The deal is expected to be completed late in the first calendar quarter or early in the second quarter of 2024.

The job cuts and financial results come as Cisco’s CEO, Chuck Robbins, attended the World Economic Forum in Davos, Switzerland, on May 25th, 2022. The company’s stock price was down 5% in extended trading following the announcement.

In conclusion, Cisco’s decision to reduce its global workforce by 5% and its lighter-than-expected financial guidance for the third quarter are indicative of the challenging macroeconomic environment and the ongoing trend of cost-saving measures in the tech industry. The company’s acquisition of Splunk is expected to be completed in the coming quarters.