American technology giant Cisco plans to lay off 5% of its global workforce — over 4,000 employees — as the company slashed its revenue guidance to $51.5-52.5 billion from $53.8-55 billion projected earlier. Cisco reported a 6% drop in revenue to $12.8 billion for the second quarter.
The company says its restructuring plan will realign the organisation and enable further investment in key priority areas. Cisco, which currently employs 85,000 people, estimates that it will recognise pre-tax charges to its financial results of around $800 million consisting of severance and other one-time termination benefits and other costs.
"These charges are primarily cash-based. Cisco expects to take the majority of these actions in the third quarter of fiscal 2024 and recognise approximately $500 million of these charges. Cisco expects approximately $150 million of these charges to be recognised in the fourth quarter of fiscal 2024, and the remaining amount of these charges primarily through the first half of fiscal 2025," it says in its earnings release.
"We delivered a solid second quarter with strong operating leverage and capital returns," says Chuck Robbins, chair and CEO of Cisco. "We continue to align our investments to future growth opportunities. Our innovation sits at the center of an increasingly connected ecosystem and will play a critical role as our customers adopt AI and secure their organizations."
"Focused execution and operating discipline drove our solid top and bottom-line results and strong margins in Q2," said Scott Herren, CFO of Cisco. "We are making good progress in our business model shift to more recurring revenue while remaining focused on financial discipline, operating leverage and shareholder returns, as evidenced by our increased dividend."
In the second quarter of fiscal 2024, Cisco returned $2.8 billion to stockholders through share buybacks and dividends. “We declared and paid a cash dividend of $0.39 per common share, or $1.6 billion, and repurchased approximately 25 million shares of common stock under our stock repurchase programme at an average price of $49.54 per share for an aggregate purchase price of $1.3 billion. The remaining authorized amount for stock repurchases under the programme is $8.4 billion with no termination date,” the company says.
Cisco’s total software revenue was flat year over year and software subscription revenue up 5% year over year. Product revenue was down 9% and service revenue up 4%. Revenue by geographic segment was: Americas down 4%, EMEA down 7%, and APJC was down 12%.
In the second quarter, Cisco recorded an adjusted profit of 87 cents per share
