Cisco announced massive staff cuts for the second time in a year

Cisco, which produces equipment for the telecommunications sector, has seen its revenue decline for three consecutive quarters, and for the first time since 2020, it will face an annual decline in revenue following the results of the current fiscal year. In February, Cisco already announced a staff reduction of 5%, and in the next couple of quarters it will reduce the number of employees by another 7%.

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This became known following the results of Cisco’s quarterly reporting event, as noted by CNBC. The company’s calendar marked the end of the fourth quarter of fiscal year 2024 on July 27. Revenue for the period fell 10% to $13.64 billion, beating analysts’ expectations. Annual revenue as a whole declined for the first time since 2020. For the upcoming fiscal quarter, the company also expects revenue to decline from $14.7 billion to $13.75 billion at the midpoint of the range. However, since analysts expected a decline to $13.7 billion, Cisco’s own forecast was higher than their expectations.

Over the past several quarters, Cisco executives said revenue had been declining due to customers holding ample inventory of the brand’s equipment, which had been previously purchased. Directly in the network equipment segment, the company’s revenue in the last quarter dropped by 28% to $6.8 billion, but in the security systems segment it grew by 81% to $1.8 billion. The company’s net profit for the period decreased by 45% to $2.2 billion in annual comparison.

The upcoming workforce reductions will require Cisco to write off about $1 billion in aggregate, with losses of $700 million to $800 million recognized in the current quarter and the remainder recognized in fiscal 2025, which has already begun. At the end of the 2023 fiscal year, Cisco had a staff of 84,900 people; in February, the company announced plans to cut 5% of its employees, and now it will have to reduce its headcount by another 7%. The release of quarterly reports with more favorable forecasts for revenue dynamics caused Cisco’s share price to rise by 5% after the close of trading in the United States.