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Cisco Announces Over 4,000 Job Cuts in Technology Sector Shake-up

Cisco Systems announced that the company will cut its global workforce by 5 percent, the equivalent of more than 4,000 employees, and adjust its annual revenue target downward Decision comes time a year in which the company runs amid difficult economic conditions, leading to massive tech layoffs across the tech sector, according to news agency Reuters the report says.

Shares of the communications equipment maker fell more than 5 percent in extended trading on Wednesday, missing Cisco's forecast for revenue of $51.5 billion to $52.5 billion. The change comes after the agency initially forecast a range of $53.8 billion to $55 billion.

Cisco laid off about 85,000 workers at the end of last year, according to information on the company's website, AFP reported.

“We also continue to see weak demand with our telco and cable service provider customers,” Chief Executive Officer Charles Robbins said on the conference call, Reuters reported.

Analysts predict continued pressure on demand for Cisco products as customers in the telecommunications industry focus on cutting costs and prioritize reducing their inventories from excess network equipment on the snow.

According to Joe Brunetto, an analyst from Third Bridge, the excess networking hardware is expected to be solved by the end of 2024 or early 2025, Reuters reported.

Meanwhile, Cisco is focusing on artificial intelligence and has partnered with Nvidia to drive growth. CEO Robbins said NVIDIA has agreed to integrate Cisco Ethernet into its technology, which is widely used in data centers and AI applications.

Cisco expects third-quarter revenue of $12.1 billion to $12.3 billion, lower than LSEG’s estimate of $13.1 billion. Earlier this month, Reuters reported that the company, which employs 85,000 people, was planning layoffs and restructuring to focus on high-growth areas.

As part of the deal, Cisco will take $800 million in pre-tax severance payments, which will cover severance and other costs Most of these charges are expected to be upheld in the first half of fiscal 2025. For the second quarter, Cisco reported adjusted earnings of 87 cents per share and revenue of $12.79 billion, which exceeded LSEG’s estimate.

Conclusion: Cisco's decision to initiate layoffs highlights the ever-changing nature of the technology sector and the need for companies to adapt and innovate in response to changing market changes. As the industry continues to evolve, companies must remain nimble, flexible, and responsive to emerging challenges and opportunities to succeed in an increasingly competitive global marketplace.