Cisco Systems Inc raised its full-year revenue and profit forecast amid easing supply chain hurdles and announced $600 million in severance and other charges related to a new restructuring, which could impact roughly 5% of its workforce.
Shares of the company rose nearly 5% in extended trading on Wednesday.
The company said the restructuring plan will begin in the second quarter of fiscal year 2023.
“This is not about reducing our workforce – in fact we will have roughly the same number of employees at the end of this fiscal year as we had when we started,” Cisco said, adding it would focus its resources on its enterprise networking and security businesses.
The restructuring comes at a time when most companies including Amazon.com Inc and Facebook’s parent Meta Platforms Inc are making deep cuts to their employee base to navigate a potential downturn in the economy.
Cisco said it would book the charges over the next few quarters, which included some costs related to downsizing its office space as more people work in a hybrid home-and-office model.
The company will talk to its employees on Thursday about the restructuring plan, Chief Executive Chuck Robbins said in a post-earnings call.
Cisco’s revenue was $13.63 billion in the first quarter, above analysts’ estimates of $13.31 billion, according to Refinitiv data.
Easing supply chain snags and Cisco’s recent investments in cloud offerings and targeted price hikes have helped the company improve its business and attract customers amid an economic slowdown.
Cisco said it expects an annual revenue growth of 4.5% to 6.5%, and adjusted earnings between $3.51 and $3.58. It previously forecast revenue growth of 4% to 6% for the year and earnings of $3.49 to $3.56, excluding items.
Excluding items, Cisco earned 86 cents per share, 2 cents above expectation. PTI