Cisco Cuts 7% of Workforce, Reports Earnings and Revenue Beat Despite Sales Decline

👉 Key Highlights:

📍 Cisco to cut 7% of its global workforce as part of a $1 billion restructuring plan.

📍 Q4 earnings beat expectations: 87 cents per share vs. 85 cents expected.

📍 Revenue for the quarter came in at $13.64 billion, surpassing the $13.54 billion estimate.

📍 Sales fell 10% YoY, marking the third consecutive quarterly revenue decline.

📍 Restructuring charges between $700M-$800M expected this quarter, with remaining in fiscal 2025.

📍 Revenue forecast for Q1 2024: $13.65B-$13.85B, slightly below last year's $14.7B.

📍 Decline attributed to clients deploying previously received equipment, impacting new orders.

📍 Subscription revenue from $28B Splunk acquisition provided some offset to core business decline.

📍 Cisco’s core networking business struggles as enterprises shift to cloud solutions.

📍 Cisco shares were down 10% YTD before the report, while Nasdaq is up 14%.

👉 Context/Background:

Cisco, a leading networking company, is undergoing a significant restructuring, cutting 7% of its global workforce as it seeks to refocus on key growth opportunities. Despite facing ongoing revenue declines, Cisco managed to exceed earnings and revenue expectations for the quarter, bolstered by increased subscription revenue from its recent acquisition of Splunk. The company's traditional networking hardware business continues to face challenges as more enterprises move to cloud-based solutions.

👉 Why This Matters:

📍 Cisco's restructuring indicates a shift in focus towards growth areas like software and subscriptions, crucial for long-term viability.

📍 The workforce reduction highlights the ongoing challenges in the networking hardware market.