Chuck Robbins, Cisco CEO & Chairman, at the WEF in Davos, Switzerland on May 25th, 2022.
Adam Galica | CNBC
Cisco announced plans to cut 5% of its workforce on Wednesday, a decision that will result in the elimination of about 4,250 jobs. Shares of Cisco were down as much as 9% in extended trading.
It’s the latest tech company to downsize in 2024, as the industry continues to squeeze out costs following the market downturn that hit two years ago. January was the busiest month for job cuts in the industry since March, as Alphabet, Amazon, Microsoft and SAP all said they were eliminating positions, as did eBay, Unity and Discord. So far this year, 144 tech companies have laid off almost 35,000 workers, according to the website Layoffs.fyi.
In addition to disclosing the job cuts, Cisco reported strong fiscal second-quarter results but gave a light forecast. Here’s how it did in comparison with the consensus from LSEG, formerly known as Refinitiv:
- Earnings per share: 87 cents, adjusted, vs. 84 cents expected
- Revenue: $12.79 billion, vs. $12.71 billion expected
Cisco’s revenue declined 6% year over year during the quarter, which ended on Jan. 27, according to a statement. Net income fell to $2.63 billion, or 65 cents per share, from $2.77 billion, or 67 cents per share, in the year-ago quarter. The company has yet to close its $28 billion acquisition of monitoring and security software maker Splunk. Cisco now expects to complete the deal late in the first calendar quarter or early in the second quarter, CEO Chuck Robbins said on a conference call with analysts.
Revenue from networking products totaled $7.08 billion, slightly below the $7.10 billion consensus among analysts surveyed by StreetAccount.
With respect to guidance for the fiscal third quarter, Cisco called for 84 to 86 cents in adjusted earnings per share on $12.1 billion to $12.3 billion. Analysts polled by LSEG were looking for adjusted earnings of 92 cents per share on $13.09 billion in revenue.
For the full year, Cisco sees $3.68 to $3.74 in adjusted earnings per share and $51.5 billion to $52.5 billion in revenue. Analysts had projected $3.86 in adjusted earnings per share, with $54.26 billion in revenue.
The guidance excludes an impact from Splunk.
Robbins flagged challenges weighing on the guidance during the call.
“In terms of the macro environment, we are seeing a greater degree of caution and scrutiny of deals given the high level of uncertainty,” Robbins said. “As we’re hearing this from our customers, it’s leading us to be more cautious with our forecast and expectations. Second, as we discussed last quarter and subsequently saw in other technology provider results, customers have been taking time since the start of our fiscal 2024 to deploy the elevated levels of products shipped to them in recent quarters, and this is taking longer than our initial expectations.”
Demand remains sluggish among telecommunications and cable service provider clients, Robbins said.
Cisco said it was increasing its dividend by a penny to 40 cents per share.
— CNBC’s Ari Levy contributed to this report.
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