Cisco Layoffs Planned In Wake Of Global Economic Uncertainty In 2020
Cisco confirms that another round of layoffs are on the horizon as macroeconomic pressures and potentially, coronavirus, are affecting IT sales.
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 to CRN on Friday.
"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.
[Related: Cisco Q2 Revenue Softens As Macro Uncertainties Affect IT Spending]
Cisco has about 75,000 employees globally.
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 percent 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.
Cisco's stock was down more than 3 percent on Friday morning to $38.80 per share.
The San Jose, Calif.-based tech giant has said it expects revenue to drop between 1.5 percent and 3.5 percent 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 percent revenue decline to $12.01 billion down from $12.45 billion in the same period a year ago.
Cisco CEO Chuck Robbins in August 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 percent.
News of a new round of layoffs first surfaced Thursday evening 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 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 center segments.