Following several quarters of low growth on the networking side of the business, management chose to change tack and embrace cloud software, announcing 5,500 jobs were to go as a result, starting in the first quarter of fiscal 2017. Unlike much of the other earnings reporting we do here, Cisco is looking pretty good in terms of numbers from the previous year’s earning reports.
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In the report, it is claimed that thecompany is expected to announce the cuts within the next few weeks, as many early retirement package plans have already been offered to employees.
Cisco has experienced a revenue drop of 6 percent at the company’s routers business in the fourth quarter ended July 30.
For the first quarter to October, Cisco forecast revenues down 1 percent to up 1 percent year-on-year, after excluding the STB business. But they promised to “reinvest substantially all the cost savings” into its future growth areas “aggressively”.
The dismissals amount to about 7 percent of Cisco’s total workforce and the company will start eliminating those jobs in the ongoing quarter. As of this writing Cisco’s stock didn’t seem to make any drastic changes and has been on an upward trend over the a year ago. “Despite slowing in our service provider business and in emerging markets after three consecutive quarters of growth, the balance of the business was healthy with 5 percent order growth”.
Global Equities Research analyst Trip Chowdhry believes that Cisco is “just buying time” with its re-focusing of resources and that more job cuts are on the horizon.
Networking giant Cisco has confirmed reports that it will restructure its business to continue its focus on “security, IoT, collaboration, next generation data centre and cloud”. The company has made moves to diversify its revenue sources, such as the $1.4 billion acquisition of cloud-based internet of things service platform developer Jasper Technologies earlier in the year, but these hardware categories remain its biggest revenue streams.
Cisco’s shares were down 1.2 percent at $30.38 in after-market trading on Wednesday.
He has been working to rekindle growth by shifting Cisco’s offerings toward software-based networking, security and management products.
“The company is undergoing a massive change, and Robbins clearly has rolled up his sleeves to get it (job cuts) done quickly”, said Rob Enderle, director of technology consultancy the Enderle Group.
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Cisco might not be ignoring areas such as it longtime network switching and routing products, but it’s clear where Robbins has the company headed, and that is toward a greater presence in networking services and software.
