Despite Posting Surprise Earnings of 23 Trillion Won, Cisco Tells 4,000 Employees to Leave... What Happened?

Less Than 4,000 Jobs to Be Cut for Increased AI Investment
Restructuring Costs Could Reach $1 Billion
Cisco: "Workforce Reallocation Is the Goal"

U.S. network equipment company Cisco Systems is set to cut thousands of jobs to expand its artificial intelligence (AI) business.

The body is not related to specific expressions in the article. Getty Images

According to the Wall Street Journal (WSJ) on May 13 (local time), Cisco plans to lay off fewer than 4,000 employees this quarter in order to allocate more resources to its AI business. This represents less than 5% of its total workforce.

Cisco announced it will increase investments in silicon, optics, security, and AI. CEO Chuck Robbins said during a conference call with analysts, "We do not currently have the necessary resources optimally allocated for the future," adding, "This adjustment is more about reallocating our workforce than about cost reduction."

This restructuring is expected to incur costs of up to $1 billion (1.4911 trillion won), including severance pay and one-time termination benefits. CEO Robbins revealed on his blog that layoff notifications will begin on May 14.

U.S. network equipment company Cisco Systems announced that it will cut about 4,000 jobs. Cisco Systems website

Recently, the U.S. big tech industry has seen a wave of layoffs aimed at increasing AI investment. Software company Oracle reduced its workforce during a large-scale data center buildout in March, and Amazon announced in January that it would lay off 16,000 office employees.

Together with the restructuring announcement, Cisco also released its quarterly results. On the back of increased sales and profits, the company raised its annual earnings outlook.

In the third quarter of the fiscal year ending April 25, Cisco received AI infrastructure orders from hyperscaler clients (large-scale AI data center operators) totaling $1.9 billion (2.8331 trillion won). This marks a significant increase from $600 million (894.54 billion won) in the same period last year.

CEO Robbins explained that the cumulative order volume for this fiscal year has already surpassed the full-year target of $5 billion (7.4545 trillion won) that Cisco had set for fiscal year 2026.

Cisco raised its full-year sales forecast for the fiscal year ending at the end of July 2026 from the previous $61.2–61.7 billion (91.2431–91.9885 trillion won) to $62.8–63.0 billion (93.6285–93.9267 trillion won).

Cisco's revenue for the past quarter rose 12% year-on-year to $15.84 billion (2.36159 trillion won). This exceeded both market expectations of $15.56 billion (2.31984 trillion won) and the company's own guidance.

Net profit for the third quarter was $3.37 billion (5.0243 trillion won), up from $2.49 billion (3.7123 trillion won) in the same period last year.

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