US-based company Cisco on Wednesday said it will lay off around 4,000 employees, as part of a restructuring workflow and shifting investment toward artificial intelligence (AI) and related sectors and raised its annual profit forecast after a surge in cloud service.
Cisco CEO Chuck Robbins said that the company will focus on AI shift, urgency and discipline to shift investment toward the areas where demand and long-term value creation are strongest. They said it will make strategic investments in silicon, optics, security and employees' use of AI across the company, as it reduces roles in some areas.
Cisco bought AI infrastructure for $5.3 billion from cloud service providers so far this financial year 202627. The company raised its full-year order expectations to $9 billion from $5 billion previously.
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"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.
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% in the third quarter compared to a year earlier, while data-centre switching orders rose more than 40%.
Cisco will reduce its workforce by 4,000 jobs in the fourth quarter, representing less than 5% of its workforce. It had about 86,200 employees as of July 26. The restructuring plan is expected to cost Cisco up to $1 billion, with about $450 million to be recognised in the fourth quarter and the remainder in fiscal 2027.