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Cisco announces plans to cut 5% of its global workforce

While you were celebrating valentines day, a Cisco employee somewhere was wrestling restlessness after being hit with the news that the company would axe about 5% of its workforce – about 4,000 employees.

There were rumours that the networking giants were considering letting some people go and it was all confirmed by the company’s CEO Chuck Robbins during an investor call on 14th February.

The CEO noted that the decision was made after a downturn in purchasing among telecommunications and cable service providers who are key revenue drivers for the company.

“We are seeing a greater degree of caution and scrutiny of deals given the level of uncertainty. As we’re hearing this from our customers, it’s leading us to be more cautious with our forecast and expectations,” Robbins said.

The decision comes even after the CEO announced that the company had a solid Q2.

“Overall, our Q2 results continue to advance our strategic business transformation around driving higher levels of software subscriptions and annualized recurring revenue, both of which showed performance gains in the quarter,” Robbins told investors.

Cisco is also in the middle of a deal to purchase Splunk in an effort to expand its portfolio of software based solutions. The deal is expected to yield roughly $4 billion of additional ARR upon closing.

According to Robbins, the acquisition will make Cisco “one of the largest software companies in the world”.

On the upside, the networking giant will see that laid off staff are adequately compensated. It is reported that they have budgeted about $800 million for severance payment and other associated costs.


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