Cisco to cut about 4,000 jobs in AI-focused restructuring as orders surge
The restructuring plan is expected to cost the company up to US$1 billion
Add BT as a preferred source
[MEXICO CITY] Cisco said on Wednesday (May 13) that it would cut nearly 4,000 jobs, as part of a restructuring aimed at shifting investment towards 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 per cent 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 towards the areas where demand and long-term value creation are strongest,” CEO Chuck Robbins said.
The company said that 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 US$5.3 billion in AI infrastructure orders from hyperscalers so far this fiscal year, and raised its full-year order expectation to US$9 billion from US$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.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
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 per cent in the third quarter compared to a year earlier, while data-centre switching orders rose more than 40 per cent.
Shares of the company have risen 32 per cent this year.
On a post-earnings call, Cisco’s finance chief, Mark Patterson, said that it is “reasonable” to expect at least US$6 billion of revenue on the AI hyperscale side in fiscal 2027.
SEE ALSO
The company reported revenue of US$15.84 billion for the third quarter ended Apr 25, beating analysts’ average estimate of US$15.56 billion, according to data compiled by LSEG.
It now expects fiscal 2026 revenue in the range of US$62.8 billion to US$63 billion, compared with its earlier forecast of US$61.2 billion to US$61.7 billion.
Cisco will reduce its workforce by fewer than 4,000 jobs in the fourth quarter, representing less than 5 per cent of its workforce. It had about 86,200 employees as at Jul 26.
The restructuring plan is expected to cost Cisco up to US$1 billion, with about US$450 million to be recognised in the fourth quarter and the remainder in fiscal 2027. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
