Cisco Systems, Inc. is reportedly planning to restructure its operations in order to prioritize high-growth sectors, potentially leading to a significant number of job cuts. The exact count of affected employees is still under consideration by the company.
The announcement of the restructuring may come as soon as next week, coinciding with Cisco’s earnings call scheduled for February 14. This move follows a previous restructuring announced by the company in November 2022, which affected around 5% of its workforce and resulted in $600 million in severance and other expenses.
During its previous earnings call, Cisco reduced its full-year revenue and profit projections, indicating a slowdown in demand for its networking equipment. The company attributed this weakness to a decrease in orders in the first quarter, with customers focusing on product installation and implementation.
Cisco has faced supply chain challenges and a slowdown in demand in recent years, especially following the pandemic. As a result, the company has been shifting its focus towards software solutions such as cybersecurity. This strategic shift aims to address the changing needs of businesses in an increasingly digital world.
In a recent development, Cisco signed a partnership agreement with Nvidia Corporation to facilitate the development of corporate AI computing infrastructures. This collaboration allows Cisco to integrate Nvidia’s AI-focused technology with its networking solutions, expanding the accessibility of AI technology beyond major data-center operators. The partnership benefits both companies by enhancing Nvidia’s distribution channels and enabling Cisco to tap into the ongoing AI investment surge that has elevated Nvidia to the status of the most valuable chipmaker globally.
Cisco’s stock price closed higher on Friday, reflecting positive investor sentiment. The company’s shares rose by 0.36% to $50.13, and after-hours trading saw a further increase of 0.02% to $50.14.
As Cisco moves forward with its restructuring plans, it remains to be seen how the company will align its operations with the evolving demands of the market. The focus on high-growth sectors and the integration of AI technology indicate a proactive approach to staying relevant in an increasingly competitive industry.
