Cisco’s latest job cuts reflects its desire to pivot to high-growth areas such as AI, rather than cut costs, its executives claimed on an earnings call last night.
The networking goliath yesterday confirmed it is cutting around 7% of its global workforce in a restructuring plan that will result in estimated pre-tax changes of up to $1bn.
It comes after it cut 4,000 jobs in February.
Cisco’s Q4 revenues came in at the high end of expectations, falling 10% to $13.6bn. Product order growth for the quarter stood at 14% (6% excluding Splunk).
On last night’s earning call, CFO Richard Herren claimed the job cuts are “not about cost saving”.
“It’s much more about finding efficiencies across the company so that we can pivot more resources, much like we did last year, into the fastest growth areas within the company, which are pivoting more into AI, pivoting more into cloud, and pivoting more into cybersecurity,” he said, according to a transcript of the call.
CEO Chuck Robbins added: “We actually are shifting hundreds of millions of dollars into AI, into AI networking for cloud, into AI infrastructure, silicon, and cyber. So, it’s a meaningful shift. But we feel like the market’s moving so quickly, we have to do that.”
The comments come after Dell acknowledged it is “becoming leaner” as it pivots its business more towards AI, with Intel also announcing plans to cut 15,000 roles at the start of the month.
Canalys Chief Analyst Jay McBain questioned whether the most recent round of tech layoffs are different from those of 2022 and 2023, with AI and automation potentially playing a role.
Asked on the call why Cisco is trimming jobs at a time when it appears to be anticipating a decent year, Robbins stressed “there is nothing else out there” to make him cautious.
“We had tremendous demand across the portfolio,” he said.
“It was very broad-based, and it was very consistent. It really is about ensuring in a rapidly moving market that we serve that we’re able to shift resources into the most important areas. So, that’s really it.”
