Shares of Cisco Systems Inc. were gaining around 8 percent in the pre-market activity on the Nasdaq after the technology conglomerate, in its fourth-quarter earnings call, announced a restructuring plan with around 7 percent cut in its global workforce. The move, which is expected to allow the firm to invest in key growth opportunities and drive more efficiencies in its business, would result in total estimated pre-tax charges of up to $1 billion.
The restructuring and the planned job cuts are expected to impact around 6,000 employees from its total workforce. The company in February had announced 5% cut in its workforce, or over 4,000 jobs.
Cisco made the announcement after reporting fourth-quarter profit above market estimates, despite a drop. The firm also issued forecast for first quarter as well as fiscal 2025.
Ciscos proposed charges consists of severance and other one-time termination benefits, and other costs. The company expects to recognize around $700 million to $800 million of these charges in the first quarter of fiscal 2025 with the remaining amount expected to be recognized during the rest of the fiscal year.
Regarding its financial figures, Cisco said it sees first-quarter earnings of $0.35 to $0.42 and adjusted earnings of $0.86 to $0.88 per share.
Revenue for the quarter is expected between $13.65 billion and $13.85 billion.
Analysts on average expect the company to report earnings of $0.85 per share on revenues of $13.65 billion, according to figures compiled by Thomson Reuters. Analysts estimates typically exclude special items.
Further, for fiscal 2025, Cisco projects earnings of $1.93 to $2.05 per share and adjusted earnings of $3.52 to $3.58 per share. Revenue is expected between $55 billion and $56.2 billion for the year.
The Street is looking for earnings of $3.56 per share on revenues of $55.62 billion.
In fiscal 2024, the companys earnings were $2.54 per share, adjusted earnings were $3.73 per share on revenues of $53.8 billion.
Cisco also has declared a quarterly dividend of $0.40 per share to be paid on October 23, to all stockholders of record as of the close of business on October 2.
Chuck Robbins, chair and CEO of Cisco, said, We delivered a strong close to fiscal 2024. In our fourth quarter, we saw steady customer demand with order growth across the business as customers rely on Cisco to connect and protect all aspects of their organizations in the era of AI.
In its fourth quarter, Ciscos profit decreased from last year but beat the Street estimates. The companys bottom line totaled $2.2 billion or $0.54 per share, down 45 percent from $4 billion or $0.97 per share.
The acquisition of Splunk, including financing costs, had a negative impact of $0.16 to its earnings, the firm noted.
Adjusted earnings were $3.5 billion or $0.87 per share for the period. Analysts had expected the company to earn $0.85 per share. The companys revenue for the quarter fell 10.5 percent to $13.6 billion from $15.2 billion last year.
In pre-market activity on the Nasdaq, Cisco shares were gaining around 7.9 percent to trade at $49.02.
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