Cisco Systems Inc., the largest manufacturer of computer networking equipment, has released an optimistic revenue forecast amid an increase in the number of orders, but at the same time announced its intention to reduce the number of its workforce as part of making significant changes to its activity strategy.
The mentioned company, headquartered in San Jose, California, expects the cash volume of its sales in the first fiscal quarter, which ends in October, will range from $13.65 billion to $13.85 billion. The corresponding statement was released by the firm on Wednesday, August 14. Analysts interviewed by the media expected that the company’s sales would be much smaller.
The optimistic forecast released on Wednesday indicates that Cisco has many opportunities to transform its business. It is worth noting that in this case, there is no provision for reorientation of the company’s activities. Transformation refers to making changes to the business strategy, but the changes of the business.
Under chief executive officer Chuck Robbins, Cisco is recasting itself as a provider of networking services and software. The company is reducing its dependence on one-time sales of hardware gear.
Since the beginning of the current year, the value of Cisco shares has fallen by 10%. At the same time, after the company released an optimistic forecast, the corresponding indicator increased by more than 6% in extended trading.
The planned cut in the number of employees will reduce Cisco’s workforce by about 7%. The implementation of this intention means the loss of more than 6,300 jobs. Currently, the number of employees of the company is 90,400 people. It is expected that the reduction of the workforce will allow the firm to shift priorities and save financial resources. At the same time, the implementation of the relevant solution will have short-term costs. These likely prospects are mentioned in a Cisco statement.
The company expects that reducing the number of employees will allow it to invest in growth opportunities and drive more efficiency. As part of the implementation of the relevant plan, the firm expects to fix pre-tax charges in the amount of up to $1 billion.
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