In a seismic shift towards prioritizing artificial intelligence, Cisco has decided to lay off 5,000 employees to reallocate resources towards AI innovations.
At a Glance
- Cisco posted $10.3 billion in profits last year but is laying off 5,500 workers.
- The layoffs are part of an effort to invest more in AI.
- The layoffs at Cisco affected seven percent of its staff and were disclosed in a notice to the Securities and Exchange Commission.
- Earlier this year, Cisco laid off 4,000 employees, or five percent of its staff, to realign the organization and invest in key areas.
Strategic Moves to AI Investment
Cisco’s recent decision to lay off 5,000 employees is a bold indication of its strategic pivot towards artificial intelligence. By cutting approximately seven percent of its workforce, the company aims to divert resources to AI, enhancing its capabilities and fostering innovation. This move underlines Cisco’s ambition to stay competitive as the tech industry increasingly integrates AI solutions.
The company disclosed these layoffs in a notice to the Securities and Exchange Commission. Earlier this year, Cisco had also laid off 4,000 employees to realign its organization and invest in key areas such as AI, cloud, and cybersecurity.
Cisco Systems announced plans to lay off about 7% of its global workforce, approximately 6,000 employees, to focus on artificial intelligence and cybersecurity. This follows a 10% decline in quarterly revenue.https://t.co/CR9c1W7dan#Cisco #Layoffs
— my investing muse (@myInvestingMuse) August 16, 2024
Financial and Market Impacts
Cisco reported a notable drop in its fourth-quarter revenue, decreasing ten percent to $13.6 billion. Interestingly, the layoff news positively impacted their stock price, boosting it from $45.04 to over $48 per share in after-hours trading. This phenomenon is not unique to Cisco; other tech giants have experienced similar stock price spikes following layoff announcements.
In a short statement, CEO Chuck Robbins highlighted the company’s efforts to keep up in the ongoing AI race.
Aside from laying off employees, Cisco aims to invest $1 billion in tech startups focusing on AI product development. Notable investments include partnerships with Cohere, Mistral, and Scale. Additionally, Cisco has allied with Nvidia to further enhance its AI infrastructure capabilities.
Cisco layoffs amid shift to AI! 😱
Cisco announces a 7% reduction in workforce, laying off approximately 5,900 employees as it pivots towards AI and cybersecurity. pic.twitter.com/4L5TrqwsTL
— The Artificially Intelligent Enterprise (@theaienterprise) August 24, 2024
Concerns and Skepticism
“Fighting against robots is a nice cover story,” University of Oxford economist and data scientist Fabian Stephany told Business Insider earlier this year. “But if you have a closer look, it’s often old school, simple economic dynamics like outsourcing or lead management cutting costs to increase salaries in other places.”
Cisco also recently closed its $28 billion acquisition of Splunk to strengthen its position in AI and cybersecurity. This acquisition further rationalizes the workforce as Cisco plans strategic integrations to enhance both AI capabilities and security infrastructures.
