Cisco announces restructuring plan in lieu of Q4 FY2024 financial results

This the second round of layoffs for the organisation this year, the first happening in February 2024.

Cisco Systems announced on 14 August 2024 (Wednesday) that there will be a 7% cut in its global headcount to concentrate on high-growth sectors like AI and cybersecurity, according to a report by ⁠Reuters.

This comes as part of the organisation's restructuring plan announced in its Q4FY24 Earnings Results. 

Per the Reuters report, this is the second round of layoffs for the organisation this year, the first happening in February 2024, where 5% of its global workforce, or more than 4,000 jobs were cut. 

As quoted in the report, Michael Ashley Schulman, Chief Investment Officer at Running Point Capital said that the layoffs were designed to "maintain focus on growth areas such as software, services, AI and cybersecurity, while balancing its financial obligations and reducing the percentage of hardware in its product mix".

In addition, it is expected that Cisco will incur pre-tax charges of up to $1bn in connection with its restructuring plan, with US$700 to US$800mn of these costs anticipated to be recognised in the first quarter.

It was shared that to drive diversification and leverage the growing AI market, Cisco made its largest-ever acquisition last year by purchasing cybersecurity firm Splunk for approximately US$28bn. 

Additionally, in June 2024, the organisation launched a US$1bn fund to invest in AI startups including Cohere, Mistral AI, and Scale AI.

According to ⁠Cisco's earnings statement, its fourth quarter revenue came up to US$13.6bn, a net income on a generally accepted accounting principles (GAAP) basis of US$2.2bn or US$0.54 per share, and a non-GAAP net income of US$3.5bn or US$0.87 per share.

Scott Herren, Chief Financial Officer, Cisco, said: "Revenue, gross margin and EPS in Q4 were at the high end or above our guidance range, demonstrating our operating discipline.

"As we look to build on our performance, we remain laser focused on growth and consistent execution as we invest to win in AI, cloud and cybersecurity, while maintaining capital returns."

Note: HRO has reached out to Cisco for details on the roles affected in Asia, and will update this story once a statement is received.

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