Cisco Systems announced plans to cut close to 4,000 jobs worldwide as part of a strategic shift to prioritize artificial intelligence and other high-growth sectors. The layoffs represent less than 5% of Cisco’s total workforce and come shortly after the company delivered a stronger-than-expected earnings report for its fiscal third quarter.
The company’s recent results showed record revenue of $15.8 billion, surpassing Wall Street’s forecast of $15.56 billion, alongside adjusted earnings per share of $1.06 versus the $1.04 consensus. Year-over-year revenue climbed by 12%, driven by increased demand across key business lines. Cisco also revealed it has secured $5.3 billion in AI infrastructure contracts from major hyperscalers so far this fiscal year and now expects total AI orders to reach $9 billion, up from its earlier $5 billion estimate.
This financial momentum underpins Cisco’s decision to realign resources toward AI, security, and networking, focusing investment on areas with the highest growth potential and market demand. As part of the restructuring, workforce reduction notifications will begin globally, with severance packages and transition services offered to impacted employees. Cisco’s support programs include extended training and job placement assistance, which they say helped about 75% of participants find new employment opportunities during previous restructurings.
The restructuring is expected to generate pre-tax charges of up to $1 billion, with roughly $450 million recognized in the next quarter and the remainder in fiscal 2027. Despite the job cuts, Cisco’s shares rose approximately 20% in after-hours trading following the earnings announcement, reflecting investor confidence in the company’s AI-driven transformation strategy.