Cisco has revealed plans to slash 5,500 jobs in its fourth quarter earnings report, in a move to restructure the company and focus on emerging and growing markets.
Internet of Things, data security, data centers, cloud, and collaboration tools will be the focus on the company post-restructure.
The networking equipment giant will spend $700 million in redundancy payments to get rid of seven percent of its workforce. Most of the redundancies will take place at Cisco’s slow moving sectors.
Reports before the earnings call said that Cisco would remove 20 percent of its workforce.
“We expect to reinvest substantially all of the cost savings from these actions back into these businesses and will continue to aggressively invest to focus on our areas of future growth,” said a Cisco representative.
Not the first IoT-related layoffs
It is not the first “old” tech company to restructure its organization around new emerging markets: Hewlett Packard recently split its enterprise and PC divisions, IBM cut thousands of jobs earlier this year, and Microsoft has seen a major reshuffling to cloud and enterprise.
As well, Intel announced earlier this year that they would shut down old line businesses, lay off employees and restructure their investment unit to turn away from hardware plays and focus on IoT, data analytics and the cloud.
Cisco made $12.6 billion in revenue in Q4 and $2.8 billion in profit, up 28 percent compared to last year. We could see that profit rise even higher, if Cisco is able to keep businesses interest in its older products while reducing the staff size.
The market has reacted rather apathetically to Cisco’s restructuring, moving from $30.52 on Friday to $30.60 on Monday. Wall Street analysts were mostly pleased with the earnings, many pushed the price target up a few dollars, according to 24/7 Wall St.