Internet networking pioneer Cisco Systems lays off more than 4,000 employees
SAN FRANCISCO — Internet networking pioneer Cisco Systems is laying off more than 4,000 employees, joining a parade of technology companies that have helped boost profits and stock prices in an increasingly artificial industry. It is a solemn reminder of the looming employment insecurity. Intelligence.
The mass layoffs, announced Wednesday in conjunction with Cisco’s latest quarterly results, represent about 5% of the company’s 84,900 employees worldwide. The purge follows layoffs in which Cisco cut 5,000 employees in late 2022 ahead of its $28 billion acquisition of Splunk, which management expects to close by April 30. It was conducted. The company expects the restructuring to cost an additional $800 million.
The double whammy of two large-scale layoffs in two years is a phenomenon that is also affecting other prominent technology companies, including Google and Amazon, both of which have seen steady increases in their jobs since the end of 2022. The company has reduced its labor costs multiple times.
The cuts are being made even though most companies are still making big bucks. San Jose, Calif.-based Cisco earned $2.6 billion, or 65 cents a share, in its fiscal second quarter, which ran from October to January, down 5% from a year earlier. Sales for the period were $12.8 billion, down 6% from the previous year.
But Cisco expects demand for its products and software services to be weak over the next three to six months as customers exercise “extra vigilance” amid an uncertain economic outlook, the chief executive said. CEO Chuck Robbins said on a conference call with analysts on Wednesday.
Cisco’s streamlining follows a series of significant job cuts since the beginning of the year at both Google and Alphabet, as well as Microsoft, TikTok, Riot Games, eBay, and PayPal. Combined with a wave of layoffs last year, the layoffs have allowed the company to further boost its already high profits, with the goal of also increasing the company’s overall market value.
Since the end of 2022, the tech-led Nasdaq Composite Index has risen about 50% in a bull market, bringing it back within reach of all-time highs reached in 2021, when pandemic lockdowns moved more of the economy online. service.
However, Cisco’s stock price rose only 6% over the same period, which may have influenced management’s decision to make even deeper layoffs than some technology companies. . And most of that meager gain now appears to have evaporated, with Cisco shares falling nearly 6% in after-hours trading on Wednesday after the company released its latest quarterly results and lackluster outlook.
Despite a wave of layoffs in the tech industry, the U.S. economy continues to add jobs at a steady pace, keeping the nation’s unemployment rate at 3.7%, just above a half-century low. ing.
Like its peers, Cisco is increasing its focus on technology areas with potential for future growth. This adjustment has led many technology companies to cut positions in some departments while creating jobs in the nascent field of artificial intelligence (AI). , we are gaining enough knowledge to begin tackling tasks that previously required the human brain.
Experts predict that AI will eventually be able to do more jobs, leading to more layoffs of people who don’t need to be hired in the future.
Robbins praised Cisco’s close relationship with chipmaker Nvidia, saying that Nvidia’s leadership in AI has helped Cisco become one of the world’s most valuable companies over the past year. He praised this as a sign that Japan is in an advantageous position to utilize this technology.
“We are a clear beneficiary of AI adoption,” Robbins said.
