Cisco to Lay Off 4,000 Employees as Focus Shifts to AI
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy CSCO?
Source: seekingalpha
- Layoff Announcement: Cisco has announced it will lay off fewer than 4,000 employees, representing about 5% of its workforce, as part of a strategic shift to focus on artificial intelligence, addressing future market demands and long-term value creation challenges.
- Financial Impact: The layoffs are expected to incur pre-tax charges of up to $1 billion, with approximately $450 million recognized in the upcoming fourth quarter of fiscal 2026, indicating the company's commitment to restructuring its cost base.
- Management Confidence: CEO Chuck Robbins expressed confidence that Cisco will emerge as a winner in the AI era, emphasizing the need for hard decisions regarding investment focus and organizational structure to align with market opportunities.
- Stock Price Reaction: Following the release of better-than-expected earnings and guidance, Cisco's shares rose over 12% in after-hours trading, reflecting market optimism about the company's growth potential in the AI infrastructure space.
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Analyst Views on CSCO
Wall Street analysts forecast CSCO stock price to fall
13 Analyst Rating
10 Buy
3 Hold
0 Sell
Strong Buy
Current: 99.290
Low
76.00
Averages
91.30
High
100.00
Current: 99.290
Low
76.00
Averages
91.30
High
100.00
About CSCO
Cisco Systems, Inc. designs and sells a range of technologies that power the Internet. The Company is integrating its product portfolios across networking, security, collaboration, applications and cloud. The Company's segments include the Americas; Europe, Middle East, and Africa (EMEA), and Asia Pacific, Japan, and China (APJC). Its Networking product category represents its core networking technologies of switching, routing, wireless, fifth generation (5G), silicon, optics solutions and compute products. Its Security product category consists of its cloud and application security, industrial security, network security, and user and device security offerings. Its Collaboration product category consists of its meetings, collaboration devices, calling, contact center and platform as a service (CPaaS) offering. Its Observability product category consists of its full stack observability offerings.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Earnings Expectations: Analysts forecast an EPS of $1.03 and revenue of $15.56 billion for Q3, reflecting strong market confidence in Cisco's ongoing growth trajectory.
- Consistent Outperformance: Cisco has surpassed revenue estimates for 15 consecutive quarters, demonstrating robust competitive strength and stable business performance, which may further bolster investor confidence.
- Market Impact: Should the earnings report meet expectations, it could drive Cisco's stock price higher, reinforcing its leadership position in the tech industry while attracting more investor interest in its future growth potential.
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- Revenue Surge: The company achieved Q4 revenue of $15.84 billion, exceeding market expectations by $280 million, reflecting strong demand in the AI infrastructure sector that has driven overall performance improvements.
- Cash Flow Concerns: Despite the strong earnings report, Cisco faces challenges with free cash flow, which could impact its future investment capabilities and shareholder returns, necessitating close monitoring of how the company addresses this issue.
- Positive Market Reaction: Following the release of its better-than-expected earnings, Cisco's stock surged, indicating market optimism regarding its growth potential, particularly in ongoing investments and innovations within the AI space.
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- Revenue Performance: The expected revenue of $15.84 billion for Q3 surpasses forecasts by $280 million, demonstrating the company's resilience in revenue growth despite fierce market competition.
- Cash Flow Concerns: While AI-related revenue growth is significant, Cisco's free cash flow issues remain a concern, potentially impacting its long-term investment capacity and shareholder returns, necessitating close attention to its cash flow management strategies.
- Options Market Reaction: The options market is pricing in an 8% post-earnings move for Cisco, reflecting heightened market attention and uncertainty regarding its earnings results, which could influence short-term stock price movements.
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- Revenue Growth: The company achieved a 12% year-over-year revenue increase to $15.8 billion, exceeding the $15.56 billion consensus, reflecting strong demand and competitive positioning in the market.
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- Layoff Announcement: Cisco has announced it will lay off fewer than 4,000 employees, representing about 5% of its workforce, as part of a strategic shift to focus on artificial intelligence, addressing future market demands and long-term value creation challenges.
- Financial Impact: The layoffs are expected to incur pre-tax charges of up to $1 billion, with approximately $450 million recognized in the upcoming fourth quarter of fiscal 2026, indicating the company's commitment to restructuring its cost base.
- Management Confidence: CEO Chuck Robbins expressed confidence that Cisco will emerge as a winner in the AI era, emphasizing the need for hard decisions regarding investment focus and organizational structure to align with market opportunities.
- Stock Price Reaction: Following the release of better-than-expected earnings and guidance, Cisco's shares rose over 12% in after-hours trading, reflecting market optimism about the company's growth potential in the AI infrastructure space.
See More
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- S&P 500 Gains: The S&P 500 index (SP500) rose by 0.5%, reflecting optimism surrounding earnings reports from select companies, particularly in the tech sector, which has shown strong performance.
- Cisco's Strong Earnings: Cisco Systems (CSCO) reported adjusted earnings of $1.06 per share for Q3 FY2026, surpassing the consensus estimate of $1.04, leading to a significant post-market surge in its stock price, showcasing investor confidence in its growth prospects.
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- Earnings Release Date: Cisco Systems is set to release its Q3 earnings on May 13, with market participants keenly anticipating the results, which could significantly influence stock price movements.
- Earnings Expectations: Analysts forecast an EPS of $1.03 and revenue of $15.56 billion for Q3, reflecting strong market confidence in Cisco's ongoing growth trajectory.
- Consistent Outperformance: Cisco has surpassed revenue estimates for 15 consecutive quarters, demonstrating robust competitive strength and stable business performance, which may further bolster investor confidence.
- Market Impact: Should the earnings report meet expectations, it could drive Cisco's stock price higher, reinforcing its leadership position in the tech industry while attracting more investor interest in its future growth potential.
See More
Cisco's Q4 Earnings Exceed Expectations by Nearly $1B
- Earnings Beat: Cisco reported a non-GAAP EPS of $1.06 for Q4, surpassing estimates by $0.02, which underscores the company's robust profitability and reinforces investor confidence in its future growth trajectory.
- Revenue Surge: The company achieved Q4 revenue of $15.84 billion, exceeding market expectations by $280 million, reflecting strong demand in the AI infrastructure sector that has driven overall performance improvements.
- Cash Flow Concerns: Despite the strong earnings report, Cisco faces challenges with free cash flow, which could impact its future investment capabilities and shareholder returns, necessitating close monitoring of how the company addresses this issue.
- Positive Market Reaction: Following the release of its better-than-expected earnings, Cisco's stock surged, indicating market optimism regarding its growth potential, particularly in ongoing investments and innovations within the AI space.
See More
Cisco Q3 Earnings Preview: Focus on Margins
- Earnings Expectations: Cisco is projected to report a non-GAAP EPS of $1.06 for Q3, beating estimates by $0.02, indicating stable profitability amidst rising market scrutiny on its performance.
- Revenue Performance: The expected revenue of $15.84 billion for Q3 surpasses forecasts by $280 million, demonstrating the company's resilience in revenue growth despite fierce market competition.
- Cash Flow Concerns: While AI-related revenue growth is significant, Cisco's free cash flow issues remain a concern, potentially impacting its long-term investment capacity and shareholder returns, necessitating close attention to its cash flow management strategies.
- Options Market Reaction: The options market is pricing in an 8% post-earnings move for Cisco, reflecting heightened market attention and uncertainty regarding its earnings results, which could influence short-term stock price movements.
See More
Cisco's Q3 Earnings Beat Estimates, Shares Surge 13%
- Strong Earnings Report: Cisco reported adjusted earnings per share of $1.06 for Q3 FY2026, surpassing the consensus estimate of $1.04, while GAAP EPS of $0.85 also exceeded the $0.76 estimate, indicating robust profitability growth.
- Revenue Growth: The company achieved a 12% year-over-year revenue increase to $15.8 billion, exceeding the $15.56 billion consensus, reflecting strong demand and competitive positioning in the market.
- Optimistic Outlook: Cisco expects Q4 revenue between $16.7 billion and $16.9 billion, nearly $1 billion above the $15.82 billion consensus, with adjusted EPS projected between $1.16 and $1.18, also above the $1.07 estimate, showcasing confidence in future performance.
- Dividend Announcement: Cisco declared a quarterly dividend of $0.42 per share to be paid on July 22, demonstrating a commitment to shareholder returns while maintaining strong earnings growth, thereby boosting investor confidence.
See More
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- Layoff Announcement: Cisco has announced it will lay off fewer than 4,000 employees, representing about 5% of its workforce, as part of a strategic shift to focus on artificial intelligence, addressing future market demands and long-term value creation challenges.
- Financial Impact: The layoffs are expected to incur pre-tax charges of up to $1 billion, with approximately $450 million recognized in the upcoming fourth quarter of fiscal 2026, indicating the company's commitment to restructuring its cost base.
- Management Confidence: CEO Chuck Robbins expressed confidence that Cisco will emerge as a winner in the AI era, emphasizing the need for hard decisions regarding investment focus and organizational structure to align with market opportunities.
- Stock Price Reaction: Following the release of better-than-expected earnings and guidance, Cisco's shares rose over 12% in after-hours trading, reflecting market optimism about the company's growth potential in the AI infrastructure space.
See More
Wall Street Major Averages Close Mostly Higher Despite Hot Inflation Data
- Dow Jones Performance: The Dow Jones Industrial Average (DJI) dipped 0.1% despite a hotter-than-expected wholesale inflation report, indicating cautious investor sentiment that could impact market confidence.
- S&P 500 Gains: The S&P 500 index (SP500) rose by 0.5%, reflecting optimism surrounding earnings reports from select companies, particularly in the tech sector, which has shown strong performance.
- Cisco's Strong Earnings: Cisco Systems (CSCO) reported adjusted earnings of $1.06 per share for Q3 FY2026, surpassing the consensus estimate of $1.04, leading to a significant post-market surge in its stock price, showcasing investor confidence in its growth prospects.
- StubHub's Recovery: StubHub (STUB) swung to profitability in Q1 with a 12% increase in sales, resulting in a stock price increase, indicating the online ticket platform's strong performance amid market recovery.
See More
