Cisco lays off 7% of workforce for AI and cybersecurity focus

Cisco Systems, the California-based technology giant, has announced plans to lay off 7% of its workforce, marking its second round of job cuts this year. This decision aligns with the company's strategic pivot towards rapidly growing sectors such as artificial intelligence (AI) and cybersecurity. With approximately 84,900 employees as of July 2023, this reduction could result in around 5,900 job losses, following an earlier announcement in February to cut about 4,000 positions. The layoffs come in the wake of disappointing earnings reports from other tech firms, notably Intel, which recently revealed plans to cut 15,000 jobs. While Intel's stock suffered a significant decline, Cisco's shares rose by about 6% in after-hours trading following its earnings announcement. Cisco's recent financial performance showed a net income of $2.16 billion for the fourth quarter, a 45% decrease from the previous year, with revenue falling 10% to $13.64 billion. In response to these challenges, Cisco is implementing a restructuring plan that will incur $1 billion in pretax charges, aimed at enhancing operational efficiency and investing in key growth opportunities. The company has also partnered with Nvidia to develop AI infrastructure and launched a cybersecurity readiness index to bolster its offerings in that sector. Despite the ongoing sales decline, analysts note a potential recovery in demand, with product orders reportedly up 6%. Cisco's focus on diversifying its revenue streams through software and subscription services, particularly following its $28 billion acquisition of Splunk, is seen as a critical move to stabilize its financial outlook.