Huge Layoffs Announced by Cisco After Missing Q4 Revenue Target
Cisco responds to large forecast miss
Cisco Systems announced recently that it would be laying off more than 1,100 extra employees than it had originally anticipated after reporting last week that it expects it will miss it’s fourth-quarter target for revenue by around 6%, year on year. As the largest network gear manufacturer for the globe, Cisco had already announced a pending 5,500 job cuts in August 2016. According to the latest reports, that number has now jumped up to around 6,600 jobs as the company emerges from its sixth straight quarter of falling revenue streams.
Moving the Focus from Hardware to Software
The recent changes for Cisco have all emerged after the company chose to switch its focus from hardware to software solutions. According to the CEO for Cisco, Chuck Robbins, the brand is still pleased with the progress that it has been making on the yearly transformation of the company. In a world where the network is becoming more important to the success of Cisco’s business, customers are adding plenty of new connections to their enterprise.
Today, Cisco are focusing on delivering an unbeatable level of value to their customers through software-defined, highly secure, automated infrastructures. However, despite these positive reports, Cisco announced a revenue amount of $11.9 billion during their third quarter, which ended at the close of April. That amount was down by 1% from the same period of 2016.
It’s Not all Doom and Gloom
Amidst the negativity, it’s worth noting that the net income for Cisco was up by 7% this year, at an average of around $2.5 billion. The company did exceptionally well during their third quarter, by delivering around $11.9 billion in total revenue, while continuing to support cash generation and profitability for the entire company by focusing on a strategic move forward. The organisation will continue to invest in various areas of growth as the business moves closer to the world of software, and recurring streams of revenue, according to Kelly Kramer, CFO.
In the case of the coming quarter, Cisco noted that revenue might see a drop to just a little bit over $12 billion, in the fourth quarter ending at the close of September. This is a small drop compared to the analyst expectations of around $12.5 billion.
In a call regarding earnings, Robbins attributed the changing revenue forecast to a small decline in the public-sector business, which is currently suffering as a result of political uncertainties in the US. However, revenue for the cybersecurity products created by Cisco is continuing to develop positively, growing to $527 million at a rise of 9%. Still as positive as that seems, that business was still falling short of analysts’ expectations, who had pegged the area at a prediction of over $545 million.
The uncomfortable news surrounding revenue has sent Cisco shares falling by around 1.4 percent, to $33.83 per share, and Cisco stock also fell another 7.7% in after-hours trading to a level of $31.22 per share.