Cisco plans layoffs as tech giant rebalances business units | CRN

November 16, 2022, 07:09 PM EST

Cisco says it will discuss the downsizing on Thursday with its employees. The tech giant also plans to shrink its real estate footprint of smaller offices, executives said.

Cisco Systems on Wednesday announced plans to lay off employees and downsize some of its real estate as the company downsizes some of its business units.

Cisco CEO Chuck Robbins answered the tech giant’s Q1 2023 earnings call to confirm plans to “rebalance” certain business units, including its Collaboration segment. Employees will be notified on Thursday of the upcoming job cuts, Robbins said.

“There’s nothing less of a priority, but we’re downsizing some businesses,” Robbins said of the company’s extensive portfolio.

The San Jose, Calif.-based company expects to book pretax charges of about $600 million under its plan. The charges, which are primarily cash, will include severance and other termination benefits, real estate charges and other costs. Cisco said it expects to recognize approximately $300 million of these charges in its second quarter of fiscal 2023, approximately $200 million in the second half of fiscal 2023, and the remaining amount until in the first quarter of fiscal year 2024.

As of July 30, Cisco had 83,300 full-time employees, according to a regulatory filing. Cisco declined to disclose how many employees would be affected by the ongoing job cuts or which other business units would be affected.

[Related:

Cisco Partner Summit 2022: CEO Chuck Robbins’ Top 5 Quotes

]

Cisco Chief Financial Officer R. Scott Herren added that the ongoing layoffs are not a head count action motivated by cost savings. “It’s a rebalancing on every level,” he said.

In fact, Cisco plans to move some displaced employees to vacancies in other business units based on their skills, Robbins said. “If you look at the number of jobs we’ve created in the areas we’re trying to invest in, it’s slightly less than the number of people we think will be affected. We will work very hard to help our employees adapt to these roles.

The CEO also said Cisco would strengthen its investments in strategic areas, including within its end-to-end security segment.

Cisco’s Collaboration segment was down 2% year-over-year to $1.09 billion in revenue from the first quarter of 2022, which the company attributed to lower meetings, offset by the cloud calling and contact center growth.

Robbins called the Cisco Collaboration business strong, particularly in the call and contact center.

“I’m actually bullish for the next 12 months on our collaboration portfolio,” Robbins said. “I think [the team] builds the best platform in the business and when you look at our devices and interoperability with Microsoft, that’s a huge thing from a customer perspective for flexibility. So I think they did a good job. And I feel like I feel pretty good about this thing.

The latest news on the Cisco layoffs comes as a slew of tech companies announced job cuts in the face of macroeconomic headwinds.