Cisco to Pursue Deep Cost Cuts in Corporate Tech-Spending Slowdown
Networking-equipment giant Cisco Systems Inc. said it would adjust investment plans and pursue deep cost cuts as customer priorities have shifted during the coronavirus pandemic, which contributed to the company posting the first annual revenue decline in three years.
Cisco , considered a proxy for corporate high-tech hardware demand, on Wednesday reported a 9% sales decline in the most recent quarter and said it would restructure operations, including offering early retirement to workers.
“The pandemic has had the most impact on our enterprise and commercial orders driven by an overall slowdown in spending,” Chief Executive Chuck Robbins told analysts on a call. The company, he said, over the coming quarters would cut more than $1 billion in costs on an annualized basis.
Cisco didn’t specify the number of positions it would shed but estimated charges of about $900 million before taxes, including about $800 million to be recognized in the current quarter, according to a regulatory filing. The company had indicated layoffs were coming.
The San Jose, Calif.-based company posted a fourth-quarter profit increase of 19% to $2.64 billion, or 62 cents a share. It estimated the restructuring hit to the current quarter’s results at 13 cents to 15 cents a share. It said it expects to generate 41 cents to 47 cents a share profit in the quarter with revenue declining 9% to 11%. Analysts surveyed by FactSet have forecast an adjusted profit of 75 cents a share with revenue falling about 7% to $12.23 billion.