Cisco said, according to CNBC. Cutting Cisco’s workforce of about 73,000 may give Robbins the resources to speed up the company’s transition to a provider of software, hardware and services created to suit customers’ needs as networking moves to cloud-based technology.
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Under CEO Chuck Robbins, who took over from John Chambers about a year ago, Cisco has pushed to stay competitive through a $1.4 billion acquisition of Jasper, a company focused on the Internet of Things, and through partnerships with businesses like Apple. Security, which Robbins said was the top priority of all its customers, posted a revenue gain of 16 percent in the quarter.
As for the numbers, Cisco reported a Q4 net income of $2.8 billion, or 56 cents per share (statement).
The restructuring will eliminate up to 5,500 positions, representing approximately 7 percent of our global workforce, and we will take action under this plan beginning in the first quarter of fiscal 2017.
“It’s part of what we’re driving in our shift to software”, said Chief Financial Officer Kelly Kramer. The Company operates its business through three segments: The Americas; Europe Middle East and Africa (EMEA) and Asia Pacific Japan and China (APJC).
Excluding Cisco’s service provider video business, which was sold to Technicolor in July, revenue would have been up 2 percent. On average, 30 analysts polled by Thomson Reuters expected earnings of $0.60 per share.
Wall Street was looking for earnings of 60 cents per share with $12.57 billion in revenue.
The shares had gained 13.2 percent this year through Wednesday’s close, compared with the 6.8 percent increase in the broader S&P 500 index. Overall sales hit $12.6 billion for the quarter, up 2% from the same period a year earlier. Cisco responded with a forecast of 58 cents to 60 cents a share for EPS with expected revenue essentially flat.
Cisco reportedly expects to record pretax charges of up to $700 million in severance and termination benefits.
The company has already offered many early retirement packages to employees, the CRN report said.
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Hutchinson said it was “relatively unlikely” there would be more job cuts until the end of the fiscal year, barring unforeseen macroeconomic events.
