Sources report that Cisco plans to enact a second round of job cuts this year, resulting in thousands more layoffs.
August 9, 2024 – 9:18 AM PDT
(Reuters) – Cisco (CSCO.O) will cut thousands of jobs in a second round of layoffs this year as the U.S. networking equipment maker shifts focus to higher-growth areas, including cybersecurity and AI, people familiar with the matter said.
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The number of people affected could be similar to or slightly higher than the 4,000 employees Cisco laid off in February, and will likely be announced as early as Wednesday with the company’s fourth-quarter results, said the sources, who were not authorized to speak publicly.
Reuters exclusively reported the job cut that San Jose, California-based Cisco announced in February, prior to the company announcing it.
The company employed around 84,900 people as of July 2023, according to its annual filing. That number does not account for the February layoffs.
Cisco did not immediately respond to a request for comment.
Its shares fell nearly 1% after Reuters first reported the cuts. The stock was down over 9% this year as of Thursday’s close.
Cisco, the largest maker of the routers and switches that direct internet traffic, has been grappling with sluggish demand and supply-chain constraints in its mainstay business.
That has pushed the company to diversify with moves such as its $28-billion buyout of cybersecurity firm Splunk, which it completed in March. The acquisition will reduce its reliance on one-time equipment sales by boosting its subscription business.
The company has been trying to incorporate AI products in its offerings and in May reiterated its target of $1 billion worth of AI product orders in 2025. In June, it launched a $1-billion fund to make investments in AI startups such as Cohere, Mistral AI and Scale AI. The company said at the time it had made 20 AI-focused acquisitions and investments in the last several years.
The layoffs are the latest in the tech industry, which has been cutting costs this year to offset big investments in AI.
Over 126,000 people have been laid off across 393 tech companies since the start of the year, according to data from tracking website Layoffs.fyi.
Earlier in August, chipmaker Intel (INTC.O) cut over 15% of its workforce, or some 17,500 people, as it tried to turn around its money-losing manufacturing business.
Reporting by Utkarsh Shetti in Bengaluru and Supantha Mukherjee in Stockholm; Editing by Rod Nickel
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