(Reuters) -Networking equipment maker Cisco Systems said on Wednesday it would cut 5% of its global workforce to focus on high-growth areas such as artificial intelligence and software, adding to thousands of job cuts by tech firms since last year.
The company also said it expects annual revenue of $51.5 billion to $52.5 billion. It had previously forecast $53.8 billion to $55 billion for the year.
Shares of the company fell about 5% in extended trading, after Cisco also said it expects third-quarter revenue between $12.1 billion and $12.3 billion, below estimates of $13.1 billion, according to LSEG data.
Analysts expect demand for Cisco’s products to remain under pressure, as clients in the telecom industry restrict spending as do cloud companies that are prioritizing clearing their excess inventory of networking gear.
The company was planning to lay off thousands of employees and restructure as it looks to focus on high-growth areas, three sources familiar with the matter told Reuters earlier this month.
Cisco agreed to buy Splunk last year for about $28 billion to bolster its software business and has disclosed plans to achieve $1 billion in AI-related orders by FY25.
The company, which has about 85,000 employees, expects to take the majority of the actions on the job cuts in the third quarter of fiscal 2024.
Cisco will incur a charge of $800 million on the layoffs before tax consisting of severance and other costs.
It expects about $150 million of these charges to be recognized in the fourth quarter of fiscal 2024, and the remaining primarily through the first half of fiscal 2025.
(Reporting by Akash Sriram and Samrhitha Arunasalam in Bengaluru; Editing by Shilpi Majumdar and Shinjini Ganguli)
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