Sunday, 25 June 2017

Cisco to cut more jobs, issues gloomy revenue outlook

By Nick Wood, Total Telecom
Thursday 18 May 17

CEO Chuck Robbins pleased with progress after networking giant reports slight decline in fiscal third quarter revenue.

Cisco will cut a further 1,100 jobs and has issued a gloomy revenue forecast for the current quarter, as the networking giant grapples with its transition to a more software-centric organisation. The latest redundancies are in addition to the 5…

Cisco will cut a further 1,100 jobs and has issued a gloomy revenue forecast for the current quarter, as the networking giant grapples with its transition to a more software-centric organisation.

The latest redundancies are in addition to the 5,500 announced last August, which are part of Cisco's plan to focus more on security, IoT, and data centre hardware and software, and save costs in the legacy routing and switching parts of the business.

The company has not shied away from snapping up specialists in these new focus areas.

Recent acquisitions include software-defined wide area networking (SD-WAN) company Viptela, AI firm MindMeld, cloud-based app monitoring provider AppDynamics, and tech services company Saggezza's Advanced Analytics team.

"We're on a journey which, as we consistently stated, will take a number of years," said Cisco CEO Chuck Robbins, on the company's quarterly investor call. "But we're pleased with the progress we're making."

He said his vision is for Cisco to be the most relevant partner for its customers as they undertake their digital transformations.

"We will deliver on that vision," Robbins said.

His comments came after Cisco reported that revenue declined 1% year-on-year to $11.9 billion (€10.7 billion) in the three months to 29 April. The fall was driven by a 2% decline in service revenue, and flat product revenue.

Operating income rose 6% to $3.2 billion, while net income was up 7% to $2.5 billion.

Looking ahead to fiscal Q4, Cisco said it expects revenue to decline by 4%-6% year-on-year. Non-GAAP gross margin is expected to be in the range of 63%-64%, compared to 64.6% a year earlier.

"This transition will take time," Robbins reiterated. "But we're remaking this company to succeed in a dramatically changing marketplace."

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