Cisco faces challenges in its core switching and routing business.
Cisco today confirmed it will lay off about 7% of its workforce – about 5,500 jobs.
Or as Cisco put it: “Today, we announced a restructuring enabling us to optimize our cost base in lower growth areas of our portfolio and further invest in key priority areas such as security, IoT, collaboration, next generation data center and cloud. We expect to reinvest substantially all of the cost savings from these actions back into these businesses and will continue to aggressively invest to focus on our areas of future growth.”
During its earnings announcement the company said total revenue actually increased 3% to $48.7 billion for its fiscal year ended July 30. Still, the company faces challenges in its core switching and routing business.
“Product revenue growth was led by Security at 16%. Collaboration, Wireless and switching product revenue increased by 6%, 5%, and 2%, respectively. Service Provider Video, NGN Routing and Data Center product revenue decreased by 12%, 6%, and 1%, respectively,” Cisco stated.
Sounding more optimistic CEO Chuck Robbins said:
“We had another strong quarter, wrapping up a great year. I am particularly pleased with our performance in priority areas including security, data center switching, collaboration, services as well as our overall performance, with revenues up 2% in Q4 excluding the SP Video CPE business,” Robbins said. “We continue to execute well in a challenging macro environment. Despite slowing in our Service Provider business and Emerging Markets after three consecutive quarters of growth, the balance of the business was healthy with 5% order growth. This growth and balance demonstrates the strength of our diverse portfolio. Our product deferred revenue from software and subscriptions grew 33% showing the continued momentum of our business model transformation.”
Reports earlier this week had the networking giant cutting as much as 14,000 jobs. Others have speculated Cisco would make a sizable cut in its workforce this year giving its growing stable of acquisitions and its shifting software emphasis. Cisco has acquired 15 companies under CEO Chuck Robbins tenure, which is now early into its second year.
In recent history– the yearend earnings report which is expected today — hasn’t been kind to Cisco employees. The company has laid off a little over 11,000 employees total in late summer reductions since 2012.