Networking giant Cisco Systems is planning a round of layoffs in the midst of slower-than-usual sales growth brought on by macroeconomic pressure, trade wars, and potentially, coronavirus.
Cisco confirmed the layoffs last week.
“This is part of an ongoing process of aligning our investments and resources to meet the evolving needs of our customers and partners. Our continued focus is on transforming Cisco and driving the innovation that will secure the long-term, profitable growth of the business. We will always offer our full support to impacted employees,” according to a Cisco spokesperson.
The spokesperson did not say how many layoffs are expected in this round and which business segments would be affected.
Investment bank Goldman Sachs said on Thursday that it expects stagnant earnings growth for U.S. companies in 2020 as a result of the coronavirus and many tech companies are already feeling the ill effects of the outbreak. The Dow Jones Industrial Average is now in correction territory — down 12.81% from its Feb. 12 high — as coronavirus cases continue springing up outside of China. Along with it, some of the world’s leading tech companies are seeing their stocks fall, including Apple, Dell and Microsoft.
The tech giant has said it expects revenue to drop between 1.5% and 3.5% during its current fiscal quarter. Earlier in February, Cisco reported its Q2 2020 earnings for the quarter that ended on Jan. 25, noting a 4% revenue decline to $12.01bn down from $12.45bn in the same period a year ago.
Chuck Robbins, CEO, Cisco in August last year said that Cisco was starting to see early indications of macro impact. During the company’s Q1, which ended in November, Robbins said the impact had been greater than Cisco anticipated. In Q2 2020, Cisco’s revenues in China fell about 30%.
News of a new round of layoffs first surfaced last week in a report from the Wall Street Journal.
Cisco in August laid off more than 480 employees at the networking giant’s San Jose and Milpitas offices in California. The company in 2018 cut 460 jobs, many of which happened within Cisco’s Customer Experience business.
The networking giant in November 2019 announced a restructuring to better address how customers are buying its networking and cloud products. The restructure included leadership changes and combining some of its business units, including its enterprise networking and data centre segments.
