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The company said it’s cutting its workforce this quarter by fewer than 4,000 jobs, representing less than 5% of total employees.
Here’s how the company did in comparison with LSEG consensus:
- Earnings per share: $1.06 adjusted vs. $1.04 expected
- Revenue: $15.84 billion vs. $15.56 billion expected
Revenue increased 12% in the quarter ended April 25, from $14.15 billion a year earlier, Cisco said in a statement. Net income rose to $3.37 billion, or 85 cents per share, from $2.49 billion, or 62 cents per share, a year earlier.
For the fiscal fourth quarter, Cisco called for $1.16 to $1.18 in adjusted earnings per share on $16.7 billion to $16.9 billion in revenue. Analysts polled by LSEG were looking for $1.07 in adjusted earnings per share on $15.82 billion in revenue.
Cisco said it’s received $5.3 billion in artificial intelligence infrastructure and hyperscaler orders so far this year, and raised its expected orders for the fiscal year to $9 billion, up from $5 billion. The company said it expects revenue in that market for the fiscal year of $4 billion, up from a prior projection of $3 billion.
While Cisco has trailed many of its data center peers in the AI race, Wall Street has been rallying to the company’s story of late, pushing the stock to a record late last year, finally surpassing its dot-com high. The shares have continued to climb this year, gaining 33%, topping the Nasdaq’s 14% advance.
CEO Chuck Robbins wrote in a blog post on Wednesday that the latest round of job cuts will begin on May 14. Cisco is the latest company to announce headcount reductions tied to AI.
“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,” Robbins said. “I’m confident Cisco will be one of those winners. This means making hard decisions – about where we invest, how we’re organized, and how our cost structure reflects the opportunity in front of us.”
Cisco said in a filing that severance and other costs will result in pre-tax charges of $1 billion, and that the company will recognize about $450 million of that in the fiscal fourth quarter.
During the third quarter, Cisco announced switches and routers that use its next-generation processor. The company also debuted a leaderboard for ranking generative AI models based on how their robustness against cybersecurity attacks.
Cisco’s networking revenue increased 25% to $8.82 billion, exceeding the $8.47 billion consensus among analysts polled by StreetAccount. Security revenue was flat at about $2 billion, compared to StreetAccount’s $1.99 billion consensus.
Executives will discuss the results with analysts on a conference call starting at 4:30 p.m. ET.
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