Cisco Systems to further lay off 1100 employees

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Cisco Systems Inc. said it would lay off another 1,100 employees and forecast a drop in quarterly revenue as the networking company contends with market shifts, including customers favoring software over hardware.

Product gross margin fell to 63 percent from 63.8 percent in the third quarter of fiscal 2016 primarily due to pricing, a supplier component remediation adjustment in the third quarter of fiscal 2016, and product mix, partially offset by continued productivity improvements.

Cisco, which announced in August that it would slash 5,500 jobs, said the new cuts would result in US$150mil (RM649mil) in additional pretax charges.

For its fiscal third quarter 2017 ended April 29, Cisco today reported declines in revenues of 1 percent, compared to the same quarter past year.

The company said that it expected a 4percent to 6 percent decline in year-over-year revenue for its fourth quarter, worse than the 1 percent that analysts expected. One new issue in the U.S.is the public sector which has stalled because there's no budget visibility, Chief Financial Officer Kelly Kramer said on the call with investors.

Democrats and Republicans agreed earlier this month to provide around US$1tril (RM4.33bil) to keep the federal government funded through the end of the fiscal year on Sept 30.

More news: Maguiresbridge bodies: Death of woman treated as murder

Demand for Cisco's routers remained weak in the latest quarter, contributing to the company's sixth straight decline in revenue.

The company's net income rose to $2.52 billion (roughly Rs. 16,222 crores), or 50 cents per share, in the third quarter ended April 29 from $2.35 billion (roughly Rs. 15,127 crores), or 46 cents per share, a year earlier.

Shares of Cisco stock have fallen 7.72 percent to $33.83 in after hours trading. That's higher than the 58 cents per share on $11.89 billion revenue expected by a Thomson Reuters consensus estimate. The company said a year ago it expects to reinvest the cost savings from its restructuring plan into "key priority areas such as security, IoT, collaboration, next generation data center and cloud".

Cisco posted adjusted earnings of 60 cents per share, excluding items, on revenue of $11.94 billion.

Analysts on average had expected adjusted earnings of US$0.58 per share and revenue of US$11.89bil (RM51.4bil).

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