Cisco Systems, Inc. (CSCO) To Cut 4,000 Jobs, Stock Tanks

Cisco Systems, Inc. (CSCO) To Cut 4,000 Jobs, Stock Tanks

Cisco Systems, Inc. (NASDAQ:CSCO) posted fiscal fourth-quarter profit and sales, which were in line with analysts’ expectations. More people accessing the internet from smartphones and increasing popularity of tablets boosted the demand for the company’s products.Cisco Systems, Inc. (CSCO) To Cut 4,000 Jobs, Stock Tanks

Cisco Systems, Inc. (NASDAQ:CSCO) CEO John Chambers said in a statement, “My confidence in our ability to be the No. 1 IT company is increasing,” and added “Now, more than ever, our customers and our partners want Cisco’s help navigating the inconsistent global landscape successfully.”

Cisco beat estimates

Adjusted profit for the biggest maker of networking equipment came in at 52 cents a share and revenues were up 6 percent to $12.4 billion. Analysts expected earnings of 51 cents a share on revenues of $12.4 billion. Net income for the company was up 18 percent to $2.27 billion, or 42 cents a share versus 1.92 billion, or 36 cents, last year.

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Product revenue for the company improved 6.4 percent to $9.74 billion beating the Street’s estimate of 9.7 billion. Service sales was up 5.5 percent to $2.68 billion but was still below the consensus estimate of $2.73 billion.

Cisco making a comeback

The San Jose, California-based company is primarily gaining from increasing use of Web video and mobile devices that requires more routers, switches and servers.

Cisco Systems, Inc. (NASDAQ:CSCO) is making a comeback with new products backed by higher spending from companies and some government agencies. Earlier, Cisco was struggling due to intense competition from companies like Hewlett-Packard Company (NYSE:HPQ), Juniper Networks, Inc. (NYSE:JNPR) and China’s Huawei Technologies Co.

 According to Jayson Noland, an analyst at Robert W. Baird & Co. in San Francisco, Cisco was expected to report a strong quarter owing to higher spending by U.S. corporations and other markets. Noland has an Outperform rating on Cisco’s stock. Cisco Systems, Inc. (NASDAQ:CSCO) has gone through a lot struggles, but they are back and looking much stronger, said Noland

Cisco announced layoff and weak outlook

Cisco also announced plans to slash headcount by 4,000 employees, which is equivalent to 5 percent of its workforce. The networking company told that it will take the restructuring charge in the fiscal first quarter. Along with the layoffs, company also gave a weak revenue growth outlook on earnings conference call.

Cisco’s guidance will be closely watched by the Wall Street as the company is considered as a bellwether for the broader industry.

Cisco Systems, Inc. (NASDAQ:CSCO) shares are tanking and are currently down about 10 percent in after-hours trading. This year, the stock has gained 34 percent.

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