Networking giant Cisco Systems is axing 7% of its workforce, marking its second round of job cuts this year, as it shifts its focus to faster-growing areas like artificial intelligence (AI) and cybersecurity.
The San Jose-based company did not disclose the exact number of job losses, but based on its July 2023 headcount of 84,900, the cuts could amount to roughly 5,900 positions. In February, Cisco announced plans to cut around 4,000 jobs.
This move comes as Cisco invests heavily in AI, recently pledging £800 million to support tech startups like Cohere, Mistral, and Scale in developing reliable AI products. The company has also partnered with Nvidia to build infrastructure for AI systems.
The job cuts follow a similar move by chipmaker Intel Corp., which announced two weeks ago that it would cut around 15,000 jobs in an effort to regain ground against rivals like Nvidia and AMD. Intel's disappointing quarterly earnings report sent its stock plummeting, while Cisco's shares saw an increase of approximately 6% in after-hours trading on Wednesday.
Cisco has also been bolstering its cybersecurity portfolio, launching a cybersecurity readiness index in March to assist businesses in assessing their resilience against attacks.
In its fiscal fourth quarter ending on July 27, Cisco reported earnings of £1.6 billion, down 45% year-on-year from £3 billion. Excluding special items, adjusted earnings were 69 pence per share. Revenue declined 10% to £10.8 billion from £12 billion.
These figures were in line with analysts' expectations, who had predicted adjusted earnings of 67 pence per share on revenue of £10.7 billion, according to FactSet.
Cisco's strategic shift towards AI and cybersecurity reflects the evolving landscape of the technology sector. As these fields continue to gain prominence, Cisco's investment and workforce restructuring aim to position the company for future growth.