Cisco CEO Chuck Robbins attends the World Economic Forum in Davos, Switzerland, on January 18, 2023.
Holly Adams | Bloomberg | Getty Images
Cisco Facebook Inc. shares rose in extended trading on Wednesday after the networking company said it would cut 7% of its global workforce and reported quarterly results that beat analysts' estimates.
Here are the key figures:
Earnings: 87 cents per share, adjusted, versus 85 cents per share expected, according to LSEG. Revenue: $13.64 billion versus $13.54 billion expected, according to LSEG.
Cisco said in a filing that it is implementing a restructuring plan that will result in a $1 billion pre-tax charge to its financial results and “will allow it to invest in key growth opportunities and drive greater efficiencies across its business.”
The company said charges of between $700 million and $800 million will be recorded in the current quarter, with the remainder recorded during fiscal 2025.
This is the second major round of layoffs this year for Cisco, which said in February it would eliminate 5% of its workforce, or more than 4,000 jobs. Cisco had 84,900 employees at the end of fiscal 2023, before the initial cuts.
Cisco has suffered a long string of declines, with sales falling for the third straight quarter. The company’s core networking business, which includes switches and routers, has been trending downward since major companies began moving to the cloud years ago. The company has been ramping up its software and securities businesses to diversify its business and generate more recurring subscription revenue.
Cisco said revenue in its fiscal fourth quarter ended July 27 fell 10% from $15.2 billion a year earlier. Fiscal year sales fell for the first time since 2020.
The decline is expected to continue. In the fiscal first quarter, Cisco said it expects revenue of $13.65 billion to $13.85 billion, down from $14.7 billion a year earlier. Analysts had expected $13.7 billion, according to LSEG.
Cisco said in recent quarters that the revenue decline was due to some customers reconfiguring equipment they had received in prior periods.
While sales continued to decline, Cisco beat expectations, helped by increased subscription revenue from its $28 billion acquisition of Splunk, which closed in March and was the company's largest deal ever.
In the last quarter, networking revenue fell 28% to $6.8 billion, while security revenue rose 81% to $1.8 billion, and collaboration revenue was flat at $1 billion. Splunk contributed $960 million in revenue.
Net income in the quarter fell 45% to $2.2 billion, or 54 cents a share, from $4 billion, or 97 cents a share, a year earlier.
Cisco shares were down 10% this year before the close, while the Nasdaq Composite Index was up about 14%. The stock was up 5.5% to $47.92 in after-hours trading.
