Cisco says it will address layoffs with its employees on Thursday. The tech giant also plans to reduce its real estate footprint of smaller offices, executives said.
Cisco Systems said on Wednesday that it plans to lay off employees and reduce some of its real estate assets as the company downsizes some of its business units.
Cisco CEO Chuck Robbins took part in the tech giant’s first-quarter 2023 earnings call to confirm plans to “rebalance” some business units, including the Collaboration segment. Employees will be notified Thursday of upcoming job cuts, Robbins said.
“There’s nothing that’s a lower priority, but we’re sizing some businesses right,” Robbins said of the company’s broad portfolio.
The San Jose, Calif.-based company expects to recognize pre-tax charges of about $600 million in conjunction with its plan. The charges, which are primarily cash-based, will consist of severance and severance payments, property-related charges, and other costs. Cisco said it expects to recognize approximately $300 million of these charges in the second quarter of fiscal 2023, approximately $200 million in the second half of fiscal 2023, and the remainder through the first quarter of fiscal 2024.
As of July 30, Cisco had 83,300 full-time employees, according to a regulatory filing. Cisco declined to disclose how many employees would be affected by the pending job cuts or which other business units would be affected.
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Cisco CFO R. Scott Herren added that the pending layoffs are not a headcount action driven by cost savings. “It’s a rebalancing across the board,” he said.
In fact, Cisco plans to move some displaced employees in current job openings to other business units based on skills, Robbins said. “If you look at the number of jobs we’ve opened in the areas we’re looking to invest in, that’s only slightly less than the number of people we think will be interested. We will work hard to help our employees fill these roles.”
The CEO also said that Cisco will strengthen its investments in strategic areas, including its end-to-end security segment.
Cisco’s Collaboration segment decreased 2% year over year to $1.09 billion in revenue compared to the first quarter of 2022, which the company attributed to declines in meetings offset by growth in Cloud Calling and Contact Centers.
Robbins called the Cisco Collaboration business strong, particularly in Calling and Contact Center.
“I’m actually optimistic for the next 12 months about our portfolio of partnerships,” said Robbins. “I think [the team] built the best platform in the industry, and when you look at our devices and interoperability with Microsoft, that’s a huge thing from a customer perspective for flexibility. So, I think they’ve done a good job. And I feel I feel pretty good about that deal.
The latest Cisco layoffs news comes as a slew of tech companies announced job cuts amid macroeconomic headwinds.