Cisco To Lay Off 5,500

Cisco plans to eliminate about 7 percent of its global workforce in order to increase its focus on security, Internet of Things (IoT), collaboration, next-generation datacenter and cloud.

The networking giant announced the cuts as part of its first quarter earnings report on Wednesday evening. The restructuring to eliminate up to 5,500 positions will begin during the current financial quarter.

Discussing the restructuring during an earnings call, Cisco CEO Chuck Robbins described the past year as a "challenging environment" in which Cisco "executed extremely well." Cisco reported a 3 percent revenue gain for the year to $48.7 billion and an 8 percent non-GAAP earnings-per-share increase to $2.36.

"Today's market requires Cisco and our customers to be decisive, move with greater speed and drive more innovation than we've seen in our history. Today we announced a restructuring enabling us to optimize our cost base and lower growth areas of our portfolio and further invest in key priority areas, such as security, IoT, collaboration, next-generation datacenter and cloud," Robbins said on the earnings call. "We expect to reinvest substantially all of the cost savings from these actions back into the businesses and we'll continue to aggressively invest to focus on our areas of future growth."

Chief Financial Officer Kelly Kramer said the restructuring will result in pretax charges of $700 million, of which $325 million to $400 million will be recognized in the first quarter of the fiscal year and the rest hitting during the rest of the year.

Posted by Scott Bekker on August 18, 2016 at 11:35 AM