Cisco said today it will bear $600 million in charges related to layoffs and business restructuring.
In its 8-K filing for the fiscal first quarter, the company announced a restructuring plan “to rebalance the organization and make further investments in key priority areas. This rebalancing will include talent mobility options and restructuring.” The The company said it will also make some changes to real estate.
Chief Executive Officer Chuck Robbins briefly touched on the restructuring during a financial call with analysts but said employees would hear more details Thursday.
“I’m not willing to go into too much detail here until we’re able to talk to [employees]. I will say what we’re doing is making reasonable adjustments to certain operations,” Robbins said.
Robbins added that Cisco is focused on moving resources into the enterprise network space and accelerating its platform strategy. “We’re going to be investing heavily in security and strengthening our team there and our ability to continue to innovate there. Those are important areas,” he said.
Chief Financial Officer Scott Herren also commented on the restructuring plan:
“And to be clear: Don’t view this as a cost-savings-motivated layoff. This is really a rebalancing. When we look at the big picture, there are areas where we want to invest more. Security, We’re moving to platforms and more cloud-delivered products. But we’re also going to maintain our financial discipline as we do that,” Herron said.
“It’s about rebalancing across the board. In a perfect world you would have a 100 per cent skills match and you could move people from the area or skills in certain areas to where we need to invest, unfortunately that’s It’s not — it’s not a perfect world,” Herron said.
Cisco isn’t the only tech company announcing layoffs these days. Twitter, Amazon, Meta, Salesforce, F5 and many other companies have been laying off employees in recent weeks.
The news came as Cisco announced what Robbins said was its largest quarterly revenue in the company’s history: $13.6 billion, up 6% from the same period last year.
The company is still hurt by supply chain shortages, but Robbins said that’s easing — if only a little.
“The easing of supply constraints and our ability to deliver hardware is now freeing up a backlog of software subscriptions connected to unshipped hardware,” Robbins said.
“As you have heard from others in the industry, we are encouraged by what we are seeing, with availability of certain components improving as shortages continued to ease last quarter. Redesigns of many of our products also helped To improve supply stability and flexibility.”
Supply chain challenges have prompted most major networking players (including Cisco, Juniper, Arista, and others) to redesign or redesign certain products in an attempt to overcome component shortages and deliver products to customers.