Cisco earnings beat expectations as company announces 7% cut to workforce

Aug. 15 (UPI) -- Cisco Systems' earnings and revenue topped Wall Street estimates on Wednesday, despite a third straight quarter of losses and an announced 7% cut to its global workforce, as the tech company shifts focus to artificial intelligence.

Cisco released its earnings after Wednesday's market close. For the period that ended July 27, earnings fell 24% to 87 cents and revenue fell 10% to $13.6 billion. The earnings mark Cisco's first full fiscal year drop since 2020.

In extended trading Wednesday, Cisco shares were up more than 5% to $48.18 after the company outlined its restructuring plan in a filing that will "allow it to invest in key growth opportunities and drive more efficiencies in its business."

At the end of fiscal 2023, Cisco had 84,900 employees.

The 7% cut to its workforce is expected to result in up to $1 billion in pretax charges, according to the filing. It is the second round of layoffs this year as Cisco shifts its growth to cybersecurity and artificial intelligence.

Approximately 4,000 employees were laid off in February, with early reports indicating a similar number of layoffs this month, as analysts blame market demand and supply chain issues in Cisco's main business of routers and switches.

Despite the losses, Cisco has outperformed expectations since March when it closed on its massive $28 billion acquisition of software company Splunk , leading to increased subscription revenue.

Cisco is one of a number of telecom and tech companies that is cutting costs to offset larger AI investments.

Last month, Intuit announced it would cut 1,800 employees -- or 10% of its workforce -- to invest in tech workers who specialize in artificial intelligence.