Cisco Cuts 5% Of Workforce Amid Cautious Enterprise Spending

Networking goliath Cisco has finally confirmed talk from earlier in the week that it is laying off thousands of staff, reflecting the cautious outlook that management are seeing in customers' spending projections.

As expected, the company is erasing five percent of the workforce, equating to roughly 4,245 positions based on the headcount of 84,900 that Cisco employed at the end of December 2023.

Earlier today, we reported on Cisco's declining fortunes for its Q2 of fiscal 2023 ended January 27 - a corporation’s fiscal years don't always track to calendar years - with revenue down six percent, caused by sliding product sales, and profit down marginally too.

CEO Chuck Robbins said some customers were still digesting stock they’d already bought from Cisco, estimating "in excess of 20-plus weeks inventory that they're working through now." That's a turnaround from two years ago when Cisco didn't have components to make enough kit to service demand.

Cisco decided to lower previous forecasts for its Q3 from between $53.8 billion and $55 billion to between $51.5 billion and $52.5 billion, setting the tone of the conference call with analysts.

On the "demand environment" the company finds itself in, Robbins said: "In terms of the macro environment, we are seeing a greater degree of caution and scrutiny of deals given the high level of uncertainty. As we're hearing this from our customers, it's leading us to be more cautious with our forecast and expectations."

He also mentioned the "elevated levels of stock" and called out specific "weak demand" from telco and cable service providers, as El Reg highlighted in earlier coverage.

It emerged today that both the UK and Japan have slid into recessions, with gross domestic product shrinking 0.3 percent and 0.1 percent respectively for the countries in the three months ended December, following on from their respective 0.1 percent and 0.08 percent declines from July to September.

• 20,000-plus tech workers got the boot this month
• IBM talks up cost savings, including 'workforce rebalancing'
• 'Only 700 new IT jobs' were created in US last year
• Splunk sheds 7% of workers amid Cisco's $28B embrace

Despite this, Forrester principal forecast analyst Michael O’Grady still expects spending on tech locally to show more resilience and grow 4.4 percent in 2024. He said the UK's situation is not a surprise as it was expected to be one of the slowest growing economies. (Yay for Brexit. – Ed)

As for Cisco, the job cuts mean it will incur an $800 million charge comprised of severance and other expenses, and these are to be recognized in the first half of Cisco's fiscal 2025.

Thousands of techies have already lost their job this year, 34,560 according to layoffs.fyi, and although the cuts so far have been less dramatic than last year, Google has been among those warning of more to come. ®