Cisco cuts 4,000 jobs despite $15.8B

Cisco said on May 13 that it would reduce its workforce in the fourth quarter by fewer than 4,000 jobs, representing less than 5% of employees, as the networking company shifts spending toward AI-related businesses. The announcement came the same day Cisco reported record third-quarter revenue of $15.8 billion for the period ended April 25. Chuck Robbins, Cisco’s chair and chief executive, told employees the company was making “hard decisions” about investment, organization and costs as demand shifts toward AI infrastructure. Cisco said most layoff notifications would begin on May 14 and continue globally under local labor rules. ### Why did Cisco pair job cuts with record revenue? Cisco reported third-quarter revenue of $15.8 billion, up 12% from a year earlier, with GAAP net income of $3.4 billion, or $0.85 per share, according to its earnings release. Non-GAAP net income was $4.2 billion, or $1.06 per share. The company said total product orders rose 35% year over year, while networking product orders increased by more than 50%. (blogs.cisco.com) Chuck Robbins said in a message to employees that “the companies that will win in the AI era will be those with focus, urgency, and the discipline to continuously shift investment toward the areas where demand and long-term value creation are strongest.” He said Cisco would keep investing in silicon, optics, security and the use of AI across the company even as it cuts roles in other areas. (newsroom.cisco.com) ### How big is Cisco’s AI business right now? Cisco said on May 13 that it had taken $5.3 billion in AI infrastructure orders year to date and raised its fiscal 2026 forecast for those orders to $9 billion, up from $5 billion. The company also raised its expected fiscal 2026 AI infrastructure revenue to $4 billion from $3 billion. (blogs.cisco.com) Mark Patterson, Cisco’s chief financial officer, said the quarter delivered double-digit growth on both the top and bottom lines and record non-GAAP operating income. Cisco’s release said the stronger AI outlook came from momentum with hyperscalers, while campus networking and data-center switching also posted gains. (newsroom.cisco.com) ### What exactly did Cisco tell employees? Robbins wrote that the reductions would affect fewer than 4,000 jobs and would begin with most notifications on May 14. He said affected workers would receive prorated fiscal 2026 bonuses, placement services and one year of access to Cisco U courses and certifications. Cisco said the notifications would proceed globally in line with local laws and regulations. (newsroom.cisco.com) Cisco also told employees it would continue hiring and investing in selected areas. Robbins named silicon, optics, security and employee use of AI as priority categories for spending after the restructuring. ### What did Cisco tell investors about the next quarter? Cisco forecast fourth-quarter revenue of $16.7 billion to $16.9 billion and GAAP earnings per share of $0.80 to $0.85. (blogs.cisco.com) The company said fiscal 2026 revenue is now expected to be $62.8 billion to $63.0 billion, with non-GAAP earnings per share of $4.27 to $4.29. Cisco said that guidance includes the estimated impact of tariffs based on current trade policy. Chuck Robbins said Cisco would discuss the restructuring and answer employee questions at an internal Cisco Beat meeting on May 21 at 8 a.m. Pacific time. For investors, the next formal milestone is Cisco’s fourth-quarter results, which would cover the period after the May 14 notification process began. (blogs.cisco.com) (newsroom.cisco.com)