Cisco has announced some good news for its shareholders - and bad news for up to 7% of its employees.
In an earnings call, the company confirmed long-rumoured plans that it was about to engage in "restructuring" as it re-focuses on AI, cloud and cybersecurity.
Scott Herren, Executive Vice President and Chief Financial Officer, said revenues of $53.8 billion made fiscal 2024 "Cisco's second strongest year on record" - beaten only by 2023, in which the firm raked in $57 billion as it "benefited from significant shipments of heightened backlog."
In Q4, it returned $3.6 billion in value to shareholders through share repurchases and cash dividends, which meant it gave out $12.1 billion (or 119% of free cash flow) during the entire year.
And what better way to mark the occasion than to cut a large chunk of its workforce?
Herren said: "Looking ahead, we remain laser-focused on growth and consistent execution as we invest to win in AI, cloud and cyber security. To focus on these key priority areas, today, we announced a restructuring plan to allow us to both invest in key growth opportunities as well as drive more efficiency in our business."
He added: "We are realigning our expenses to better capture the opportunities ahead. As part of our announced restructuring plan, we expect to impact approximately 7% of our global workforce with total estimated pre-tax charges of up to $1 billion."
When asked how many people will lose their jobs, Herren said that it wouldn't simply be a case of getting rid of thousands of employees. Instead, the budget could be reallocated to employing folks in cheaper locations.
"The reduction that we're doing as much more of a reallocation versus a headcount savings," he said. "In some cases, the efficiencies that we're going to get will be from moving into lower-cost locations. So it's not as easy to do the math to say like, hey, if you were 90,000 heads before and 7%, I expect you to be at whatever the math works out to.
"Some of that is not going to be just a one-for-one headcount change, it's going to be savings that come by putting more work into lower-cost locations."
Are you affected by the cuts? Let us know what's happening by contacting jasper@thestack.technology
