Cisco Systems will cut another 1,100 jobs, on top of the 5,500 job cull it announced last year, as it struggles to transform from a beleaguered hardware manufacturer into a company with a focus on software.
The company said that it expects revenue for its fourth quarter to fall 4-6 percent from the year before. That revenue of between $11.88bn and $12.13bn missed analysts’ average expected revenue of $12.51bn, according to Thomson Reuters Institutional Brokers’ Estimate System. Cisco shares dropped over 8 percent, the worst fall since November 2013.
The old guard
“I am pleased with the progress we are making on the multi-year transformation of our business,” Chuck Robbins, Cisco’s CEO said.
“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.”
Kelly Kramer, Cisco’s CFO, added: “We executed well in Q3, delivering $11.9 billion in total revenue, while driving solid profitability and cash generation as we deliver on our strategic priorities. We will continue to invest in growth areas as we move the business toward more software and recurring revenue and return value to shareholders.”
One of the reasons the company did not perform as well as some had hoped was down to the current US administration, the company said.
Sales to the US public sector, one of its biggest customers, fell 4 percent due to an unclear government budget strategy. “It’s a pretty significant stall right now with the lack of budget visibility,” Robbins said in an earnings call.
Earlier this month, Republicans and Democrats agreed to a $1 trillion spending bill that will keep the federal government funded through the end of September, but that saw many of the deep-rooted disagreements over fiscal policy undressed. President Trump is expected to reveal his first full budget for the 2018 fiscal year on Tuesday.
Revenue for Cisco’s cybersecurity business showed promise, growing 9 percent to $527m - but it also missed analysts’ expectations of more than $545m.