Cisco Shares Drop after Revenue Declines, To Lay Off 1,100 Jobs

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Cisco’s shares dropped quickly 1.37 percent at $33.83, in after-hours trading after it projected a steeper-than-expected drop In sales and lower-than-predicted profits for the current quarter. Also, it said it would cut 1,100 more jobs, as the world’s largest networking gear maker steps up efforts to transform into a software-focused company.

The San Jose, California-based U.S. tech giant said that it expected revenue for its fourth quarter to fall between 4-6 percent from a year earlier, implying a range of $11.88 billion-$12.13 billion.

Its shares fell more than 6% percent in after-hours trading to $31.05 on Wednesday after the figures were released, before pulling back on some of the losses to exchange down 5.1% percent following the closing bell.

The projection comes alongside Cisco’s release of earnings from its third quarter, which ended April 29.

Revenue came in at $11.9 billion, a 1 percent year-on-year drop. Net income went up 7% percent compared to the same period a year ago to $2.5 billion, a hair ahead of the $2.43 billion that was expected. Earnings per weak share were 50 cents, a 9% percent year-on-year improvement, and better than the 47 cents that was being looked for.

Cisco said in its release that it was expanding the number of employees that would be laid off by a restructuring plan initially announced in August, which was expected to cut 5,500 workers, resulting in $150 million in additional pretax charges. It will now include an additional 1,100 employees as well.

“The network is becoming even more critical to business success as our customers add billions of new connections to their enterprises. We are laser focused on delivering unparalleled value through highly secure, software-defined, automated and intelligent infrastructure,” said Chuck Robbins, chief executive officer of Cisco.

Moreover, the tech giant said orders in its public sector business, which includes sales to federal, state and local governments, fell 4% percent in the third quarter ended April 29.

“It’s a pretty significant stall right now with the lack of budget visibility,” Chief Executive Chuck Robbins said on an earnings call.

Cisco, like other legacy technology players, will be turning its focus to high-growth areas such as security, the Internet of Things and cloud computing, amid intense competition from companies such as Huawei and Juniper Networks Inc.

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