The company’s shares rose 5% in extended trading after it forecast upbeat revenue for the current quarter.
“Inventory digestion is complete and we are now returning to a more normalized demand environment,” Chief Executive Chuck Robbins said on a call with analysts.
Cisco has been working to reduce its reliance on its giant networking equipment business, which has struggled due to supply chain disruptions and a post-pandemic demand slowdown. In February, it said it would cut 5% of its global workforce, or more than 4,000 jobs.
It announced the second round of layoffs on Wednesday, confirming a Reuters report last week.
The San Jose, California-based company estimates it will recognize pretax charges of up to $1 billion in connection with the restructuring plan, of which between $700 million and $800 million will be recognized in the first quarter.
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The layoffs allow Cisco to “maintain focus on growth areas such as software, services, artificial intelligence and cybersecurity, while balancing its financial obligations and reducing the percentage of hardware in its product mix,” according to Michael Ashley Schulman, chief investment officer at Running Point Capital. The company expects first-quarter revenue of between $13.65 billion and $13.85 billion, the midpoint of which is higher than analysts’ average expectation of $13.71 billion, according to LSEG data.
To accelerate diversification and capitalize on the AI boom, Cisco agreed to buy cybersecurity firm Splunk last year for about $28 billion, its largest deal to date.
It also launched a $1 billion fund in June to invest in AI startups like Cohere, Mistral AI and Scale AI.
Cisco reported revenue of $13.64 billion for the fourth quarter ended July 27, compared with an estimate of $13.54 billion.
Its adjusted earnings per share were 87 cents, versus the estimate of 85 cents.
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