Cisco Systems, Inc. (NASDAQ:CSCO), a worldwide leader in information technology (IT), announced it is slashing 250 jobs in San Jose, California as the company’s focus transitions toward more software and subscription services. To make way for the transition, Cisco will be jettisoning a total of 1,100 jobs worldwide.
The job cuts weren’t widely announced, but instead were buried deep in the company’s 2017 third-quarter results as a footnote. Cisco said the 1,100 job cuts were an extension of a restructuring plan announced in August 2016, when the company announced it would slash 5,500 jobs. The company expects the current job losses to be “substantially completed by the end of the first quarter of fiscal 2018.
The tech giant’s decision to lay off 250 workers in the South Bay region were detailed in a May 25, 2017 report that Cisco filed with California’s Employment Development Department. According to the report, the layoffs are permanent, and were effective May 18, 2017.
On May 17, Cisco reported third-quarter revenue that beat Wall Street projections. But the company announced a downbeat outlook for the fourth quarter which includes a five percent drop in revenue and earnings that were sharply lower on a year-over-year basis.
“I am pleased with the progress we are making on the multi-year transformation of our business,” said CEO Chuck Robbins. “We are laser focused on delivering unparalleled value through highly secure, software-defined, automated and intelligent infrastructure.”
Cisco CFO Kelly Kramer said the company’s outlook was being impacted by “a combination of many factors,” including third-quarter orders that were lower than expected, a trend which Cisco expects to continue into its fourth quarter.
Wall Street was expecting the company to report fourth-quarter earnings of $0.62 per share, but instead is forecasting profits of $0.46 to $0.51 per share. Cisco is projecting fourth-quarter revenue of $11.88 billion to $12.13 billion, which is far lower than the $12.53 predicted by Wall Street.
The recent round of layoffs is part of a larger strategy that has been taking place at Cisco Systems. In 2016, Cisco cut 940 jobs in San Jose and, in the first five months of 2017, Cisco has axed 390 jobs in that city.
“Cisco Reports Third Quarter Earnings,” Cisco Systems, Inc., May 17, 2017.
“WARN Report,” State of California Employment Development Department, May 25, 2017.