Cisco has announced 1,100 more job cuts after forecasts revealed that the company would miss current-quarter revenue estimates by some way. The world’s largest networking gear maker said that it expected revenue for its fourth quarter to fall by as much as 6 per cent compared to the same time last year, a drop of around $600 million.
The announcement comes after Cisco initially announced it was planning to cut 5,500 jobs last year. It is currently unknown whether the job cuts will affect the 5,000 UK-based workers. The new cuts are expected to result in $150 million in additional pretax charges.
Chief Executive Officer Chuck Robbins is trying to recast Cisco as a provider of networking services, in a bid to reduce its reliance on hardware sales. Instead Robbins is looking to up the companies cloud-based and software products to provide predictable revenue.
"They’re fighting some headwinds in their traditional products," said Erik Suppiger, an analyst at JMP Securities. “It’s not going to be a very quick transition.”
Cisco said orders in its public sector business, which includes sales to federal, state and local governments, fell 4 per cent in the third quarter ended April 29. Demand for Cisco's routers has also remained weak, contributing to the company's sixth straight decline in revenue. Share prices fell as much as 8.6 per cent in extended trading following the announcement.
On a more positive note, revenue in Cisco’s security business, which offers firewall protection and breach detection systems, is on the rise. In the last quarter, the security unit rose by 9 per cent to $527 million. And that number is likely to increase in the wake of the ransomware attack that continues to disrupt public and private organisations across the world.