Cisco Announces 5% Global Workforce Reduction

Cisco, a global technology giant, has unveiled plans to trim its global workforce by 5 percent, equating to over 4,000 job cuts, as it grapples with a challenging economic landscape. The decision, announced alongside its latest quarterly earnings report, sent Cisco shares plummeting by about 9 percent.

The company’s most recent quarterly earnings showed a 6 percent year-on-year decline in revenue, totaling $12.8 billion. Scott Herren, Cisco’s CFO, highlighted progress in transitioning to a more recurring revenue model while emphasizing financial discipline and shareholder returns, stating, “We are making good progress in our business model shift to more recurring revenue while remaining focused on financial discipline, operating leverage, and shareholder returns, as evidenced by our increased dividend.”

CEO Chuck Robbins echoed this sentiment, adding, “We continue to align our investments to future growth opportunities.”

Despite being responsive to market dynamics, as evidenced by similar layoffs in November 2022 and September 2023, Cisco’s decision to reduce its headcount by 5 percent mirrors broader trends in the tech industry. This year, notable companies such as Microsoft, Amazon, and SAP, among others, have also implemented workforce reductions by eliminating positions.

Cisco anticipates approximately $800 million in charges related to the layoffs, primarily stemming from severance and termination payouts. The announcement marks the latest in a series of downsizing moves within the tech sector in 2024.

The company has yet to close its $28 billion acquisition of monitoring and security software maker Splunk. Cisco reportedly expects to complete the deal late in the first calendar quarter or early in the second quarter, as CEO Chuck Robbins said. Despite the job cuts, Cisco increased its dividend by a penny to 40 cents per share.