Cisco Laid Off Employees To Bet On Artificial Intelligence

Cisco revealed plans to slash its headcount by 5% — roughly 4,250 employees across the tech behemoth’s global workforce — as it steps up its focus on artificial intelligence.

San Jose, Calif.-based Cisco said the layoffs — which will cost the company some $800 million in pre-tax charges related to severance and benefits — will enable it to focus on high-growth areas such as AI and software development.

Cisco CEO Chuck Robbins told investors on Wednesday: “Our innovation sits at the center of an increasingly connected ecosystem and will play a critical role as our customers adopt AI and secure their organizations.”

The IT and software maker — which has roughly 85,000 workers worldwide — announced the layoffs in an earnings call alongside its quarterly results, where it also cut its annual revenue forecast from as much as $55 billion to between $51.5 billion and $52.5 billion.

“We also continue to see weak demand with our telco and cable service provider customers,” Robbins added during the call.

As part of its AI push, Cisco announced the next phase of its partnership with chip giant Nvidia earlier this month “to offer enterprises simplified cloud-based and on-prem AI infrastructure,” including “both networking hardware and software to support advanced AI workloads,” according to Robbins.

Robbins also said that Nvidia agreed to use Cisco’s ethernet with its own technology, which is widely used in data centers and AI applications.

In the second quarter of its 2024 fiscal year, Cisco recorded an adjusted profit of 87 cents per share and revenue of $12.79 billion, both above LSEG estimates.

Cisco is just the latest tech company to downsize thus far in 2024: Earlier this month, Snap said it will let go of 10% of its workforce.

The round of layoffs likely affected about 540 employees, based on the company’s stated headcount of approximately 5,400 workers as of last September.

And last month, Alphabet was reportedly poised to lay off dozens in its secretive X Lab division — an innovation lab that works on high-tech projects like Wing, which consists of delivery drones; Loom, an internet network of balloons; and Makani, kites that generate wind energy.

With the layoffs, Snap may be trying to emulate the recent success of one of its key rivals, Facebook and Instagram parent Meta.

Meta’s global headcount was 67,317 as of the end of 2023, down 22% from the previous year.