Cisco Systems, the 40-year-old networking giant, is making significant changes to meet increased customer demand for modernized technology, improved security, and advancements in artificial intelligence (AI). The company’s quarterly earnings report and strategic shifts provide insights into these developments. Cisco’s positive outlook for the AI era is reflected in its forecast for the first quarter of fiscal year 2025.
The company predicts revenue between $13.65 billion and $13.85 billion, surpassing Wall Street expectations. For the entire fiscal year, Cisco expects revenue in the range of $55 billion to $56.2 billion, representing a 3% year-over-year growth. CEO Chuck Robbins highlighted several $100 million-plus transactions with global enterprises leveraging Cisco’s technology platforms to modernize, automate their network operations, and deploy next-generation machine learning and AI applications.
This strong customer demand signals a recovery in networking demand. To align with strategic shifts, Cisco confirmed plans to lay off around 7% of its global workforce, roughly 6,000 employees, at an estimated cost of up to $1 billion.
Cisco’s AI-driven strategic focus
CFO Scott Herren emphasized that the layoffs are about improving efficiencies and pivoting resources to high-growth areas like AI, cloud, AI infrastructure, silicon, and cybersecurity. Leadership changes include Jonathan Davidson transitioning from executive vice president and general manager of the networking business to an adviser role, while Jeetu Patel will now lead a unified networking, security, and collaboration organization. This consolidation aims to accelerate product innovation and provide a more integrated customer experience.
Cisco has surpassed $1 billion in AI orders to date with webscale customers and expects another $1 billion in AI product orders this fiscal year. Enterprises are upgrading their infrastructure in preparation for AI, leading to significant investments in Cisco’s technology platforms. The company is also enhancing its cybersecurity offerings, adding 230 new extended detection and response (XDR) customers and nearing 600 active users on that platform.
The Splunk acquisition is showing promising results, with double-digit growth in annual recurring revenue and successful cross-sales initiatives. Cisco’s strategic focus on AI, cybersecurity, and infrastructure modernization indicates a forward-looking approach aimed at leveraging emerging technologies to drive growth and provide robust solutions for its customers.
