Cisco is facing fewer orders and is considering a reorganization. The reorganization is expected to affect thousands of jobs in the short term.
Update 15 February: Several days after the initial announcement by Cisco CEO Chuck Robins that Cisco would restructure, it has become clear how many people will be impacted by this round. According to DataCenter Knowledge, Cisco will layoff 5 percent of its workforce. This means more than 4000 employees will lose their jobs. All in all, it has the characteristics of a ‘standard’ layoff round. Roughly the same number of people lost their jobs in November 2022.
Original story:
According to Reuters sources, Cisco is facing disappointing orders, which has led it to revise its expectations for its 2023 annual results. Instead of sales growth, November 2023 indicated that sales might fall 6.6 per cent.
In particular, demand for network equipment would be disappointing, reducing orders. Customers seem more concerned with installing and implementing products they purchased in 2023 rather than buying new ones.
Mass layoffs imminent
According to several sources, the falling demand will lead to another round of layoffs. The exact size of the layoff round is unknown, but it would involve thousands of employees. The mass layoff announcement could take place next week, in line with the results of the second fiscal quarter of 2024 announced this week.
In November 2022, the tech giant launched a reorganization that resulted in the layoff of 4,100 employees, representing 5 per cent of its total workforce.
Investing in growth segments
The mass layoff is not entirely unexpected, given CEO Chuck Robbins’ announcement that the company wants to focus more on core strategic areas to grow revenue.
Cisco expects to generate more revenue from last year’s acquisition of Splunk, Robbins indicated in the earnings call for the financial quarter. Final completion of this acquisition is due in the second half of this year.
In addition, the tech giant is seeking more revenue from AI infrastructure. At the end of last year, Cisco reportedly had about $1 billion in orders from cloud providers outstanding in this area. The company also works on reference solutions that combine network infrastructure applications with partner GPUs and storage devices.
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