Cisco reported revenues for its fiscal fourth quarter to July down 2 percent year-on-year to United States dollars 12.6 billion.
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However, Cisco announced it will be restructuring, impacting about 5,500 employees or about 7 percent of the company’s global workforce to focus on driving profitability and drive revenue growth across lines of business.
Cisco has said savings from up to 5,500 job cuts would be reinvested into key growth areas as the gear maker now shifts its focus from its legacy hardware towards higher-margin software business. It grew 3% in revenue to US$48.7 billion over the year.
“We continue to execute well in a challenging macro environment”, said Cisco Chief Executive Office Chuck Robbins about the fourth quarter.
Robbins, who replaced John Chambers in July past year, has been steering the company toward more software and subscription-based services, states a Reuters report.
Revenue at the company’s routers business fell 6 percent in the fourth-quarter ended July 30, while switching unit revenue was up 2 percent.
Cisco India has now seen nine straight quarters of growth starting from the fourth quarter of 2013-14 (18 per cent) to the current quarter. “Those businesses have great margins and it’s part of the overall transition”.
Saying it achieved year-on-year growth of 2 percent, Cisco reported the fourth quarter revenue of 12.6 billion USA dollars, net income on a generally accepted accounting principles (GAAP) basis of 2.8 billion dollars, or 0.56 dollar per share, and non-GAAP net income of 3.2 billion dollars, or 0.63 dollar per share. TBR expects Cisco to enhance its Security Advisory Services and Cloud Consulting Services by integrating threat telemetry and analytics around user behavior and sensitive data in cloud services generated by CloudLock technology.
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. Previous cost cutting helped boost Cisco’s profit 21 per cent to $2.8 billion, or 56 cents per share. Excluding items, the company earned 63 cents per share.
Earlier there were rumours that the company may lay off about 14,000 employees, or almost 20 percent of the network equipment maker’s global workforce.
About the layoffs, Cisco said it “will take action under this plan beginning in the first quarter of fiscal 2017”. The company said it will take charges totalling about $700 million associated with the restructuring.
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Cisco’s excuse this year is that the firm needs to “pivot” to follow the vogue for software-defined networking, which requires staff with more skills in this area and fewer in developing networking hardware.
