Cisco Restructures and Cuts 4,000 Jobs to Focus on AI

Cisco recently announced a significant restructuring that will result in the elimination of approximately 4,000 jobs, or less than 5% of its total workforce. This decision, made public on Wednesday, is part of a strategy to refocus the company on artificial intelligence (AI). This announcement comes as Cisco reports strong financial results and raises its sales forecasts, driven by increasing demand for AI-related infrastructure.

Cisco's restructuring will include increased investments in key areas such as AI chips, fiber optics, and security. According to a memo from CEO Chuck Robbins, Cisco is reducing "less than 4,000 jobs" to focus more on these strategic areas. Despite these job cuts, the company announced better-than-expected quarterly results and raised its sales forecasts.

In a regulatory filing, Cisco indicated that the restructuring could cost up to $1 billion, primarily due to severance pay. The company expects to record about $450 million of these charges in the current quarter, with the remaining costs extending into fiscal 2027. This announcement led to a more than 17% increase in the company's stock during after-hours trading.

Cisco joins a growing list of tech companies that are linking layoffs to efficiency gains related to AI and broader organizational changes. Robbins emphasized that Cisco is shifting its investments to areas "where demand and long-term value creation are strongest," including AI chips, fiber optics, and security.

The company also clarified that it will continue to hire in strategic areas while eliminating certain positions as part of its AI-related restructuring. For employees whose roles are affected, Cisco has planned support to help them find new opportunities, both internally and externally, through its placement services. A program that has already enabled 75% of participants to find their next role.

Cisco is also committed to providing personalized learning, with one year of access to all Cisco U courses and certifications, covering AI, security, networking, and more. Robbins thanked the departing employees for their contributions and highlighted the importance of focus, resilience, and leadership from the remaining employees for Cisco's future growth.

Finally, Cisco will hold an informational meeting, Cisco Beat, on May 21 at 8 AM PT, to discuss these changes and answer employee questions. During this announcement, Cisco also revealed its third-quarter results for fiscal 26, showing a record revenue of $15.8 billion, up 12% from the previous year, with double-digit growth in both revenue and net income.