Cisco cuts 4,000 jobs in AI restructuring as hyperscaler orders surge to $9 billion

Cisco to cut about 4,000 jobs in AI-focused restructuring as orders surge

May 13 (Reuters) - Cisco (CSCO.O), opens new tab said on Wednesday it would cut nearly 4,000 jobs, as part of a restructuring aimed at shifting investment toward artificial intelligence and related growth areas, and raised its annual revenue forecast after a surge in hyperscaler orders. Shares of the San Jose, California-based networking equipment maker rose 15% in extended trading. "The companies that will win in the ⁠AI era will be those with focus, urgency, and the discipline to continuously shift investment toward the areas where demand and long-term value creation are strongest," CEO Chuck Robbins said in a post on Cisco's website. Cisco said it was making strategic investments in silicon, optics, security and employees' use of AI across the company, as it reduces roles in some areas. The company has taken $5.3 billion in AI ⁠infrastructure orders from hyperscalers so far this fiscal year, and raised its full-year order expectation to $9 billion from $5 billion previously. It now expects fiscal 2026 revenue in the range of $62.8 billion to $63 billion, compared with its ⁠earlier forecast of $61.2 billion to $61.7 billion. CEO Robbins said the company would reduce its workforce by fewer than 4,000 jobs in the fourth quarter, representing less ⁠than 5% of its employee base. It had about 86,200 employees, as of July 26 last year. The restructuring plan is expected to ⁠cost Cisco up to $1 billion, with about $450 million to be recognized in the fourth quarter and the rest in fiscal 2027. Reporting by Juby Babu in Mexico City; Editing by Shinjini Ganguli Our Standards: The Thomson Reuters Trust Principles., opens new tab

Rising AI demand helps Cisco to another earnings and revenue beat - SiliconANGLE

Rising AI demand helps Cisco to another earnings and revenue beat Shares of the networking giant Cisco Systems Inc. soared 20% in extended trading today after it reported solid third-quarter earnings and revenue numbers and announced a new round of job cuts. The company said it's going to cut less than 4,000 jobs, representing less than 5% of its total workforce. Cisco's results were hardly stellar, although they did come in ahead of expectations. The company delivered adjusted earnings of $1.06 per share, coming in just ahead of Wall Street's target of $1.04 per share. Revenue for the period rose 12% from a year earlier to $15.84 billion, compared to the Street's target of $15.56 billion. On the other hand, Cisco's overall profitability improved quite a bit. The company reported net income for the quarter of $3.37 billion, up from a profit of just $2.49 billion in the same period one year earlier. Looking to the fourth quarter, Cisco said it's anticipating earnings of between $1.16 and $1.18 per share on sales of between $16.7 billion and $16.9 billion. Those numbers suggest an even better quarter lies ahead, with Wall Street targeting four-quarter earnings of just $1.07 on $15.82 billion in sales. Cisco Chief Executive Chuck Robbins (pictured) told analysts on a conference call that the company has so far received $5.3 billion worth of orders for artificial intelligence infrastructure and from hyperscalers so far this year. For the full year, it's expecting that total to exceed $9 billion, he added, up from an initial target of just $5 billion. The company also expects $4 billion in total revenue this year from that market, up from an earlier projection of just $3 billion. Although Cisco struggled to gain much momentum earlier on in the AI race, the company's story has gotten some legs in recent months, pushing its stock to a record high late last year, finally surpassing its dot-com era high. This year, the company's stock has continued to rise, gaining more than 32% so far, more than double the 14% gain of the broader Nasdaq index. In a blog post published today to coincide with the earnings results, Robbins said that the latest round of job cuts would begin the very next day. It's the latest in a growing number of technology companies to announce job reductions that have been pinned on the rising adoption of AI. "The companies that will win in the AI era will be those with focus, urgency, and the discipline to continuously shift investment toward the areas where demand and long-term value creation are strongest," Robbins wrote. "I'm confident Cisco will be one of those winners. This means making hard decisions -- about where we invest, how we're organized, and how our cost structure reflects the opportunity in front of us." The layoffs announced by Cisco add to the growing number of job cuts in the technology sector this year. According to the website Layoffs.fi, the industry has now slashed 103,571 jobs so far this year, approaching the 124,201 figure it reported for all of last year. In its filing, Cisco said costs such as severance pay for terminated employees will result in pre-tax charges of around $1 billion, with $450 million of that set to be recognized in the fourth quarter. During the quarter, Cisco announced a number of new switches and routers based on its next-generation network processor, as well as a new Universal Quantum Switch, which is designed for quantum computing systems. It also closed on a couple of major acquisitions, buying the Israeli cybersecurity firm Astrix Security Ltd. in a deal valued at close to $300 million, and the AI-native observability startup Galileo Technologies Inc. Both acquisitions were made to enhance Cisco's "agentic" security offerings, the company said. Cisco will hope that the acquisitions can ignite new growth in its security division, for revenue was flat in the prior quarter at just below $2 billion, in-line with the Street's consensus estimate of $1.99 billion. The networking segment was the real growth driver, with revenue there up 25% to $8.82 billion, exceeding the Street's $8.47 billion forecast.

Cisco to cut about 4,000 jobs in AI-focused restructuring as orders surge - The Economic Times

Cisco announced nearly 4,000 job cuts as part of a strategic restructuring to boost investment in AI and growth areas. The networking giant also raised its annual revenue forecast, driven by a significant surge in hyperscaler orders for AI infrastructure, leading to a substantial stock increase.Cisco said on Wednesday it would cut nearly 4,000 jobs, as part of a restructuring aimed at shifting investment toward artificial intelligence and related growth areas, and raised its annual revenue forecast after a surge in hyperscaler orders. Shares of the San Jose, California-based networking equipment maker rose more than 16% in extended trading. "The companies that will win in the AI era will be those with focus, urgency, ⁠and ⁠the discipline to continuously shift investment toward the areas where demand and long-term value creation are strongest," CEO Chuck Robbins said in a post on Cisco's website. The company said it was making strategic investments in silicon, optics, security and employees' use of AI across the company, as it reduces roles in some areas. Cisco has taken $5.3 billion in AI infrastructure orders from hyperscalers so far this fiscal year, and raised its full-year order expectation to $9 billion ⁠from $5 billion previously. "Though much will likely be made about a slight decrease in headcount, the post-market move we are seeing is truly the result of hyperscaler capex spilling ⁠downstream. This move validates that this capex is about more than just chips," said Ryan Lee, Direxion's senior vice president of product and strategy. Cisco is benefiting as companies expand spending beyond AI processors to the high-speed networks required to connect large data-centre systems. Its networking product orders grew more than 50% in the third quarter compared to a year earlier, while data-centre switching orders rose more than 40%. Shares of the company have risen 32% this year. On a post-earnings call, Cisco's finance chief, Mark Patterson, said it is "reasonable" to expect at least $6 billion of revenue on the AI hyperscale side in fiscal 2027. The company reported revenue of $15.84 billion for the third quarter ended ⁠April 25, beating analysts' average estimate of $15.56 billion, according to data compiled by LSEG. It now expects fiscal 2026 revenue in the range of $62.8 billion to $63 billion, compared with its earlier forecast of $61.2 billion to $61.7 billion. Cisco will reduce its workforce by fewer than 4,000 jobs in the fourth quarter, representing less than 5% of its workforce. It had about 86,200 employees as of July 26. The restructuring plan is expected to cost Cisco up to $1 billion, with about $450 million to be recognised in the fourth quarter and the remainder in fiscal 2027.

Cisco Lays Off 4,000 Employees In AI Overhaul, CFO Mark Patterson Says Move Not 'Savings' Driven But Abou

Cisco Systems (NASDAQ:CSCO) is cutting nearly 4,000 jobs as part of a sweeping restructuring effort designed to accelerate its push into artificial intelligence, security, silicon and networking infrastructure. Cisco Restructuring Focuses On AI, Security And Silicon On Wednesday, the networking giant announced the workforce reduction, framing the move as a strategic repositioning rather than a traditional cost-cutting initiative. Cisco said growing demand from hyperscale cloud customers and AI-related infrastructure is driving the need to redirect investments toward faster-growing business segments. During the company's third-quarter earnings call, CFO Mark Patterson noted that the restructuring is intended to improve execution speed in critical growth markets. "This was really not a savings-driven restructure," Patterson said. "[It's] really realigning resources around silicon, optics, security and AI." He added that rapid technological shifts are forcing Cisco to ensure talent and investments are concentrated in the right areas to stay competitive. Chuck Robbins Says AI Era Requires Urgency Earlier during the announcement, CEO Chuck Robbins reinforced that message, describing the layoffs as part of a broader transformation strategy aimed at long-term value creation. "The companies that will win in the AI era will be those with focus, urgency, and the discipline to continuously shift investment toward the areas where demand and long-term value creation are strongest," Robbins said. Cisco Raises Revenue Outlook Amid Hyperscaler Demand Cisco posted third-quarter revenue of $15.84 billion, topping analyst estimates of $15.56 billion, while adjusted earnings of $1.06 per share beat expectations of $1.03. For the fiscal fourth quarter, Cisco forecast revenue of $16.7 billion to $16.9 billion, above estimates of $15.82 billion and adjusted earnings of $1.16 to $1.18 per share, ahead of projections of $1.07 per share. The company also raised its full-year revenue guidance to $62.8 billion to $63 billion, up from its previous outlook of $61.2 billion to $61.7 billion and above analyst expectations of $61.6 billion. Price Action: On Wednesday, Cisco Systems shares jumped 19.8% to $122 in after-hours trading after closing the regular session up 2.6% at $101.87, according to Benzinga Pro. According to Benzinga Edge Rankings, CSCO ranks in the 85th percentile for Momentum, driven by solid performance across short, medium and long-term time frames. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo: PJ McDonnell / Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Cisco To Cut Nearly 4,000 Jobs In Restructuring Push Around AI, Security

The networking giant announced thousands of layoffs as part of a restructuring move aimed at helping shift resources to continue its investments in strategic areas as advanced AI, security, and quantum networking technology, the company said during its third fiscal quarter 2026 financial analyst conference call. Cisco Wednesday said it is initiating a corporate restructuring that will result in layoffs of less than 4,000 of its employees. Cisco Chair and CEO Chuck Robbins, in his prepared remarks for financial analysts during the company's fiscal third quarter 2026 quarterly conference call, unveiled the restructuring plan aimed at focusing resources on strategic areas. "To ensure we are capturing the significant opportunities in silicon, optics, security, and AI, we announced a restructuring plan today to reallocate resources and allow us to invest in these key growth areas," Robbins said. "These actions are building from a position of strength and focusing on the technologies that will accelerate our growth deliver unmatched innovation to customers and partners and define our future." [Related: Cisco Reinstates Compute Deal Registration; Partners Cheer Reversal] Robbins, in a blog posted Wednesday afternoon on Cisco's website, wrote that the IT industry is facing a complex environment, and that companies looking to grow need to shift investment towards those areas with strong demand and long-term value creation. "This means making hard decisions - about where we invest, how we're organized, and how our cost structure reflects the opportunity in front of us," he wrote. "With this, we are making changes today that will result in the reduction of our overall workforce in Q4 by fewer than 4,000 jobs, representing less than 5 percent of our total employee base. Most notifications will begin on May 14 and continue globally in alignment with applicable local laws and regulations." At the same time, Robbins wrote, Cisco is making other strategic investments to grow the company. "While we are reducing roles in some areas, we are making clear, strategic investments - particularly in silicon, optics, security, and in our employees' use of AI across the company," he said. "These investments are building from a position of strength - and focusing on the technologies and businesses that will accelerate our growth, deliver unmatched innovation to customers and partners, and define our future." In a regulatory filing, Cisco said it will recognize pre-tax charges to its GAAP financial results of up to $1 billion consisting of severance and other one-time termination benefits, and other costs. The company said it expects to recognize approximately $450 million of these charges in the fourth quarter of fiscal 2026 with the remaining amount expected to be recognized during fiscal 2027. A restructuring at Cisco is certainly a concern, said Lane Irvine, director of strategic alliances at Long View Systems, a Calgary, Alberta-based solution provider and Cisco channel partner. "As you look at a lot of the tech companies doing restructuring, AI is having an impact on how they manage their business and how they reduce costs," Irvine told CRN. "Certainly the public markets are putting the biggest pressure probably on that, as opposed to driving profitability." It is also absolutely a concern for partners, Irvine said. "Cisco is definitely one of the top partners in how they support the channel and the work we do," he said "But they're definitely kind of moving more towards the mainstream where there is less support and there is a higher expectation for partners to execute on the customer onboarding, customer support, and customer success components. They're pushing more of that responsibility to the partners. It's something we've got to watch carefully." Cisco has a lot of competitive pressures in the market right now with other vendors stepping up in their specific areas, Irvine said. "Cisco's got a really strong end-to-end story, but they've got to make sure they're able to stay competitive from a price perspective," he said. "And to do that, of course they have to reduce their overhead costs. There's obviously two sides to it. We're certainly cautious on the partner side and partner support. But we're definitely looking forward to some price decreases that will create a more competitive environment for Cisco." Cisco continues to invest in strategic opportunities such as AI, Robbins said. For instance, he said Cisco earlier this week said it is open sourcing the Foundry Security Spec, a production-grade blueprint for building scalable agentic security evaluation systems using both available and new AI models. "We are providing this blueprint to customers to accelerate their ability to take advantage of agentic AI and stay ahead of adversaries," he said. Cisco IQ, the company's unified AI-powered delivery engine for Cisco services, is now generally available with more than 250 customers already onboarded, Robbins said. "Cisco IQ provides customers with a real-time benchmark view of Cisco assets and configurations in their environment, helping to future-proof it against emerging architectural threats," he said. Cisco is also accelerating AI advancements internally for its teams, Robbins said. "CIRCUIT, our proprietary AI assistant, is now fully embedded in how Cisco operates, with near universal adoption across our employee base and over 8 million total quarterly interactions. CIRCUIT leverages a network of advanced third-party AI models, automatically choosing the best engine for every task, or letting users make that choice. As a founding design partner with OpenAI on Codex, our engineers have been using it from the beginning, and as of this week we have made Codex available to our entire product organization to enable them to build tools and reimagine new products at unprecedented speed." Cisco has also made progress in the area of quantum networking, Robbins said. "We recently introduced a working research prototype of the Cisco Universal Quantum Switch designed to route and preserve quantum information between systems at room temperature and over standard telecom fiber," he said. "By building this infrastructure now, we are helping to accelerate the entire quantum ecosystem that will power the data centers of the future." For its third fiscal quarter 2026, which ended April 25, Cisco reported total revenue of $15.84 billion, up 11.9 percent over the $14.15 billion the company reported for its third fiscal quarter 2025. That included product revenue of $12.12 billion, up from last year's $10.37 billion, and services revenue of $3.74 billion, down from $3.78 billion. On the product side, networking accounted for $8.82 billion in revenue, up 25 percent; security for $2.01 billion, flat over last year; collaboration for $1.02 billion, down 1 percent, and observability for $269 million, up 3 percent. Cisco's Americas business accounted for $9.60 billion, up 14 percent year-over-year. Cisco also reported GAAP net income of $3.37 billion or 85 cents per share, up significantly from last year's $2.49 billion or 62 cents per share. On a non-GAAP basis, Cisco reported net income of $4.23 billion or $1.06 per share, up from last year's $3.83 billion or 96 cents per share. That beat analyst expectations by 2 cents per share, according to Seeking Alpha.

Cisco buoyed by surge in AI-related orders

Cisco reported quarterly results and guidance that topped Wall Street expectations, driven by a sharp acceleration in orders for artificial intelligence infrastructure. The US group posted revenue of $15.84bn for the quarter ended April 25, compared with $15.56bn expected by analysts according to LSEG. Adjusted EPS reached $1.06, also beating forecasts. Following the release, the stock jumped 15% in after-hours trading. Quarterly revenue rose 12% y-o-y, while net income reached $3.37bn compared to $2.49bn a year earlier. For Q4, Cisco forecasts adjusted EPS of between $1.16 and $1.18 and revenue of $16.7bn to $16.9bn, both levels exceeding market expectations. The group said it has already booked $5.3bn in orders from hyperscalers and AI infrastructure providers this year. Cisco raised its annual target for AI-related orders to $9bn, up from a previous $5bn, and now expects $4bn in revenue from this segment. Long perceived as lagging in the AI data center race, the group is now benefiting from renewed investor interest. During the quarter, Cisco also introduced new switches and routers powered by its next-generation network processors. Revenue from its networking business surged 25% to $8.82bn, while cybersecurity revenue remained stable at around $2bn.

Cisco to Cut Jobs in Shift to Capture More AI Demand

Cisco Systems is cutting jobs as part of a shift toward high-growth parts of its business, including AI infrastructure. The networking company said Wednesday that it is launching a restructuring that will cost up to $1 billion in severance, one-time termination benefits and other costs. The plan will allow Cisco to invest in growth opportunities around silicon, optics, security and AI, the company said. The overhaul was announced in tandem with Cisco's latest quarterly earnings report, in which is raised full-year guidance on the back of strong revenue and earnings. The San Jose, Calif., company now expects $62.8 billion to $63.0 billion of revenue for the current fiscal year, which ends in late July. That's up from a previous forecast for $61.2 billion to $61.7 billion. Earnings are now expected to reach $3.16 to $3.21 a share for the current fiscal year, up from the $3.00 to $3.08 previously projected, Cisco said. Adjusted earnings are forecasted to reach $4.27 to $4.29 a share, up from a prior forecast of $4.13 to $4.17. For the fiscal third quarter that ended April 25, revenue rose 12% to $15.84 billion. That beat analyst estimates for revenue of $15.56 billion, according to a survey by FactSet, and topped its own guidance from February for up to $15.60 billion. Cisco logged a third-quarter profit of $3.37 billion, or 85 cents a share, up from $2.49 billion, or 62 cents a share, in the same quarter a year earlier. Adjusted earnings were $1.06 a share, beating the $1.03 cents forecast of analysts surveyed by FactSet. The rose 13% to $114.80 in aftermarket trading following the results.