Cisco has today confirmed the company will cut up to 5,500 positions – nearly 7% of the company’s global workforce.
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The company will eliminate 5,500 positions from its workforce of more than 73,700, Cisco said Wednesday in a statement.
The 5,500 layoffs represent about 7 percent of Cisco’s global workforce, and will be implemented in the first quarter of the company’s 2017 fiscal year, which is already underway.
Vishal Tripathi, research director in Gartner, has told the TOI that companies like Cisco are increasingly focusing on a software-defined business and making big strides in the cloud ecosystem, ToI reported.
Cisco made the job-cut announcement as part of its fiscal fourth-quarter earnings report.
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.
Cisco announced no cuts last summer, which coincided with Chuck Robbins taking the role of chief executive in July.
Cisco has regularly trimmed its workforce.
The two companies hope to generate $1 billion of new revenues by 2018, but last month Ericsson CEO Hans Vestberg stepped down as it attempts to drive through its own restructuring plan.
Switching product revenue increased by 2% and NGN Routing revenue was down 6%.
He added: “Our product deferred revenue from software and subscriptions grew 33 percent showing the continued momentum of our business model transformation”. IoT, modern datacenters, security, cloud, collaboration- pretty much the same areas on which many modern tech companies have shifted their focus to.
While the results were encouraging, the news of job cuts dampened market sentiment and Cisco shares suffered on Nasdaq, where after falling 1.29 percent during regular trade, they dropped another 1.4 percent during after-hours trade Wednesday.
Excluding one-time items, Cisco earned 63 cents a share, which topped the 60-cents-a-share estimate forecast by analysts surveyed by Thomson Reuters.
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“At the same time, we actually are working very diligently on bringing innovation to our core.So it’s not that we’re ignoring one in favor of another, we just want to make sure our investments are commensurate with our growth opportunity from a relative perspective”, he said.
