Cisco now profits billions and makes thousands of unexpected layoffs, according to a fresh filing with the SEC.
Tech giant Cisco Systems is laying off 7% of its workforce, the company announced in a filing with the Securities and Exchange Commission on Wednesday.
It’s the San Jose tech giant’s second time cutting thousands of jobs in 2024.
The new job cuts will affect a whopping 5,500 employees this year.
Cisco is a massive company, reporting to have a total of 84,900 employees in July 2023 before it laid off at least 4,000 workers in February.
Cisco spokesperson Robyn Blum said in an email to SFGATE that the layoffs are meant to allow the company to invest in “key growth opportunities and drive more efficiency in our business.”
Cutting costs through layoffs and then plowing cash into expensive technologies like artificial intelligence is a trend that’s emerged at some tech companies over the past two years, according to the outlet.
“Cisco is laser focused on growth, consistent execution, and resetting our cost structure as we invest in AI, cloud, and cybersecurity,” Blum wrote.
She added that the company would provide “full support” to impacted employees but didn’t offer specifics about the plan for workers’ severance pay.
Cisco announced its earnings for its last fiscal year on Wednesday with total revenue being slightly down year over year, to $53.8 billion.
However, the company still reported a whopping $10.3 billion profit during the same period.
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Also Read: A Giant Company Now Announces Unexpected Layoffs in Virginia
Other Economy News Today
Applications for unemployment benefits now surge to new highs, a sign that the white-hot labor market is starting to cool off.
First-time applications for unemployment benefits rose last week to 231,000, the highest level since August, per CNN.
Thursday’s data also showed that the number of continuing claims, or applications from people who have filed for unemployment for at least one week, was 1.78 million.
That’s an increase of 17,000 from the prior week, according to the Bureau of Labor Statistics.
The latest numbers come less than a week after the monthly jobs report showed the US economy added just 175,000 positions in April, less than economists expected and a steep drop-off from prior months.
US employers have now added an average of 245,500 jobs per month, versus 2023’s 251,000-per-month average.
Still, hiring remains strong. Although the unemployment rate ticked up to 3.9% last month, it’s the 27th consecutive month that the jobless rate has held under 4%, matching a streak last seen in the late 1960s.
Weekly jobless claims data tends to be volatile but, while one week’s worth of data “does not a trend make,” said Chris Rupkey, chief economist at Fwdbonds.
“We can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication.”
“Company layoffs are picking up, hinting at caution on the part of companies as they weigh the outlook for the second half of the year,” he wrote in a note Thursday.
The Federal Reserve has been battling inflation by raising its key lending rate in the hopes of slowing the economy.
While the labor market has so far resisted those efforts, remaining white hot for the past 18 months despite 11 rate hikes from the central bank, Fed Chair Jerome Powell said last week that demand has “cooled from its extremely high level of a couple of years ago.”
Ian Shepherdson at Pantheon Economics said in a note Thursday: “We’d need to see at least a month of elevated readings to convince us that the trend really has turned.”
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Also Read: Retirees Will Now Receive More Money For Social Security
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