Cisco is planning to cut around 4,000 staff as it seeks to redirect resources to high-growth areas such as AI.
In a letter to employees, CEO Chuck Robbins wrote that he “could not be prouder” of the growth they had delivered following yet another blow-out quarter fuelled by AI demand.
Fiscal Q3 revenues leapt 12% year on year to $15.8bn amid booming AI infrastructure demand.
But echoing recent moves from the likes of CrowdStrike and Cloudflare, Robbins announced a restructuring drive designed to reallocate resources towards key growth areas including AI.
Networking’s dominant player plans to reduce its overall workforce in Q4 by “fewer than 4,000 jobs” (less than 5% of its total employee base), Robbins confirmed.
“While we are reducing roles in some areas, we are making clear, strategic investments – particularly in silicon, optics, security, and in our employees’ use of AI across the company,” he wrote.
Mythos misgivings
On the earnings call, Robbins also acknowledged there’s a “lot of concern” among customers about unpatched technology following the arrival of Claude Mythos Preview model (which Cisco is currently testing as a founding member of Project Glasswing).
“First and foremost, we’re using it meaningfully to test our own code. I think you’re just gonna see us accelerate patches and things of that nature out to our customers,” he said on the call, a transcript of which can be found here).
“I actually think while there will be a security opportunity, there’s going to most likely be a lot of focus from our customers on modernising their infrastructure so that they don’t have this risk from technology that just can’t be patched because it’s well past last day of support.”
Although Robbins said he didn’t think Cisco had any “meaningful orders” in Q3 as a result of Mythos, he predicted “that could change in the future”.
While Cloudflare’s share price last week sank by more than a fifth on its plans to “architect” itself for the “agentic AI era”, Cisco’s shares have risen 19% since its results were unveiled last night.
In a signal of its bullishness, the Nasdaq-listed networking giant raised its full-year revenue guidance by over $1bn to $62.8bn-$63bn.
