Cisco Systems Inc., the largest manufacturer of equipment for computer networks and the internet, provided an optimistic projection for quarterly sales, while announcing a plan to eliminate positions and downsize office space to reflect shifting market dynamics.
According to Cisco, sales would increase 4.5–6.5% in the quarter that ends in January 2023. As reported by the company, the total revenue increased significantly in the fourth quarter that ended July 2022 when compared to that in the previous quarter, while net profit declined significantly during this period.
According to Cisco, a reorganization plan that will start in the current quarter will involve closure of some offices and job cuts to "rebalance the organization" and accommodate employees who operate in a hybrid system from home and workplaces. Cisco, based in San Jose, California, will record about half of its pretax expenses for severance, termination, and other costs in the current quarter of 2022.
About 5% of the company's employees would be affected by the reorganization plan, but they will be given the opportunity to shift to other roles at Cisco, according to chief financial officer Scott Herren. At the end of July 2022, Cisco Systems employed more than 83,000 people. In recent weeks, owing to an uncertain economic environment, Cisco announced job cuts and hiring freeze, joining other technology companies such as Meta Platform Inc., Amazon.com Inc., and Salesforce Inc.
The management of Cisco stated that maintaining networks at the speed of data generation is crucial because businesses and governmental organizations would continue to invest regardless of external factors. This positivity during the general economic crisis is being strengthened by Cisco's ability to meet the demands of customers through increased accessibility to components and by sustaining strong orders.
Following the announcement, prolonged trading saw a 4% increase in the share prices. The stock, which previously ended trading at $44.39 in New York, fell 30% so far in 2022.
Cisco has been attempting to ignite growth with gear, software, and new products offered over the internet under chief executive officer Chuck Robbins. Robbins wants the company to be less dependent on one-time sales of pricey machines and more of a provider of regular services. The current, fourth quarter's profit, excluding certain adjustments, could range from 84 cents to 86 cents per share. Cisco forecast that figure at $3.51 to $3.58 per share for the fiscal year.
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