Cisco Systems Inc., among the top networking equipment maker, plans to cut about 5 per cent of its workforce, due to a slowdown in corporate tech spending. The move will impact roughly 4,000 employees out of its nearly 85,000 strong workforce from last year, costing the company about $500 million in restructuring.
The persistent wave of layoffs is showing no signs of abating, as numerous tech companies have been announcing thousands of job cuts. While the majority of economies appear optimistic about the trajectory for 2024, this optimism evidently does not extend to the corporate sector. If not for the corporate sector, then at least for the workforce, which is facing the brunt of 'under-pressure' balance sheets of these companies.
As reported by Bloomberg, the announcement was followed by a forecast that fell short of Wall Street's expectations. This caused Cisco's shares to take a nosedive during late trading. Chief Executive Officer Chuck Robbins told analysts, during a conference call, that customers are apprehensive about the economic outlook, leading them to defer orders and reassess their equipment requirements.
Cisco stated that the company have been experiencing a temporary 'pause' in customer orders owing to the ongoing installations of previously acquired equipment. While this supply backlog is expected to resolve itself in the latter half of the year, Cisco is expecting that subdued spending by telecommunications firms will last longer than initial projections.
Cisco shares witnessed a sharp decline of 6.7 per cent in late trading session. Despite showing minimal movement during the initial month of 2024, the shares closed at $50.28 in New York.
