Cisco announced plans to cut more than 6,300 jobs, reducing its workforce by 7% as part of a broader restructuring to focus on AI, cybersecurity, and cloud markets. The networking giant disclosed the layoffs in its fiscal fourth-quarter earnings report, emphasizing that the move aims to reallocate resources rather than shrink its payroll. Cisco CFO Scott Herren stated, "We need to pivot more resources into the fastest-growth areas of our business, and we're doing it by finding efficiencies and then reallocating those costs."
The restructuring includes forming a new product group that combines networking, security, and collaboration, led by executive vice president Jeetu Patel. Meanwhile, Jonathan Davidson will step away from his role as general manager of networking. This is Cisco's third major workforce reduction in two years, following a $600 million restructuring in November 2022 and another round of layoffs 15 months later.
Cisco's shift toward AI is driving these changes, as the company seeks to boost revenue by modernizing its networking business. The company reported $1 billion in AI-related infrastructure orders this year and expects another $1 billion by the end of the year. However, Cisco's revenue for the fourth fiscal quarter ended in July fell 10% year-over-year to $13.6 billion, with networking revenue dropping 28% to $6.8 billion.
Industry analysts note that layoffs have become common as tech companies pivot toward AI. Sameh Boujelbene of Dell'Oro Group observed, "Layoffs might be seen as a quick way to free up budget and redirect resources toward AI initiatives." Cisco forecasts revenue of $13.65 billion to $13.85 billion for the current quarter, with analysts expecting results at the lower end of the range.