CSCO Cisco Systems Inc

By Anne Steele 

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.

The fresh round of cuts expands a previous restructuring plan announced last August that was designed to cut 5,500 jobs, or 7% of Cisco's workforce at the time. According to a company filing, Cisco's head count as of Jan. 28 -- amid the first round of cuts -- was 71,959.

Shares of Cisco fell 5.4% to $32 after hours as the company also said revenue ticked down in the fiscal third quarter and would drop more sharply -- by 4% to 6% -- in the fourth quarter.

Cisco, which disclosed the layoffs in its quarterly earnings report, said it has booked charges of $614 million during the first nine months of the fiscal year and expects to book $150 million to $200 million more during the fourth quarter.

Cisco Chief Executive Chuck Robbins is trying to shift the business from hardware to software and services. The company is making gains in areas such as security, but it faces weak customer spending in its core networking hardware businesses.

For the quarter ended in April, Cisco's revenue edged 0.5% lower to $11.94 billion, as a decline in service revenue more than outweighed a modest uptick in product revenue. The company earned $2.52 billion, or 50 cents a share, up from $2.35 billion, or 46 cents a share, a year ago. Excluding certain items, adjusted earnings rose 3 cents to 60 cents a share.

Analysts polled by Thomson Reuters were looking for an adjusted 58 cents a share on $11.89 billion in revenue.

Total operating expenses were 8.2% lower from a year ago as the company spent less on research and development, sales, marketing and overhead.

For the final quarter of the fiscal year, Cisco said it expects adjusted profit of 60 cents to 62 cents a share, compared with the average analyst estimate of 62 cents.

--Rachael King contributed to this article

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

May 17, 2017 17:09 ET (21:09 GMT)

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