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Cisco Systems, Inc. (NASDAQ:CSCO) shares are trading higher in the premarket session on Thursday.
Yesterday, the company registered fourth-quarter revenue of $13.64 billion, beating the consensus estimate of $13.537 billion.
Cisco reported a 14% year-over-year growth in product orders, though this figure was up 6% when excluding the impact of Splunk. Despite this, total revenue fell by 10%, with product revenue decreasing by 15% and services revenue increasing by 6%. Splunk contributed approximately $960 million to total revenue for the fourth quarter of fiscal 2024.
The company reportedly revealed agendas to cut thousands of employees, per a filing.
This plan is projected to affect around 7% of Cisco's global workforce. The company anticipates recognizing up to $1 billion in pre-tax charges on its GAAP financial statements, which will include severance, one-time termination benefits, and other costs, primarily in cash.
Cisco expects to record approximately $700 million to $800 million of these charges in the first quarter of fiscal 2025, with the remainder to be recognized throughout the rest of the fiscal year.
According to Chief Financial Officer Scott Herren, layoffs are not just about strengthening profits, reported Bloomberg. Cisco needs to turn further into cybersecurity, cloud systems and artificial intelligence-related products, so it’s releasing resources to do that, Herren said in an interview, Bloomberg added.
On a non-GAAP basis, Cisco’s gross margins improved, with total gross margin at 67.9% (up from 65.9% a year earlier), product gross margin at 67.0% (up from 65.5%), and services gross margin at 70.3% (up from 67.5%).
Non-GAAP operating income was $4.4 billion, reflecting a 17% decline, and the non-GAAP operating margin stood at 32.5%.
Cisco reports adjusted earnings of 87 cents per share, beating analyst estimates of 85 cents per share.
Price Action: CSCO shares are trading higher by 8.16% to $49.15 premarket at last check Thursday.
Image: Shutterstock/ Anucha Cheechang
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Posted In: CSCO