Cisco Slashes Jobs And Invests the Savings On Next-Gen Technologies

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Cisco managed to beat analysts expectations on revenues and EPS, driven both by strength in security, switching and collaboration and by a recovery in the service provider and emerging market businesses. The company reported revenues of $12.64 billion, which was about $70 million more than what analysts expected. Its non-GAAP EPS came in at $0.63, 3 cents ahead of the consensus estimates.

Cisco Q4 earnings

The company, which has long been a powerhouse for networking hardware equipment such as routers and switches, has been gradually increasing its focus on the software side, in the wake of changing industry dynamics. In fact, Cisco’s software business has exhibited strong momentum over the past several quarters, which continued in Q4 fiscal 2016 with deferred revenue for software and subscription increasing 33%. In line with this transition, the company announced its plans to cut around 5,500 jobs, so as to optimize its cost base and focus resources on developing and acquiring the technologies and assets required for IoT, collaboration, the next generation data center and the cloud. Cisco made one such acquisition, CloudLock Inc., in Q4 to complement its Security Everywhere strategy, which is aimed at providing protection from the cloud to network endpoints.  The company also hopes to deliver more cloud based subscription services.

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The biggest highlight of the earnings report, however, was the job cuts that will begin in the first quarter of fiscal 2017. These cuts are likely to come from areas that Cisco deems have ran their course and the company is planning to subsequently divert a portion of its savings towards the R&D of the aforementioned domains.

 

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