Cisco shares have their best day of 2020, earnings beat expectations, 7% layoffs

Cisco The computer networking company announced on Thursday that it was cutting 7% of its workforce, sending its shares up about 7%, their biggest one-day gain since November 2020. Reporting quarterly results This exceeded analysts’ expectations.

Morgan Stanley analysts said in a note to investors that Cisco’s results were better than expected.

“Cisco’s fiscal fourth quarter earnings beat expectations and better-than-expected order intake provided some relief and supports Cisco’s return to a more predictable pattern after nearly four years of disruption,” wrote analysts who recommend buying the stock.

Cisco reported revenue of $13.64 billion for the quarter, beating Wall Street expectations of $13.54 billion. Revenue was down 10% from a year ago, marking the third consecutive quarter of declining sales. Net income was down 45% from a year ago, but profits still beat expectations.

Bank of America analysts noted that online sales fell 28.1% year-on-year, but said that was mainly due to difficult comparisons and the focus this quarter was on order recovery.

“Data center switching orders increased double digits year over year, while campus switching and routing orders increased high single digits,” analysts with a “buy” rating on Cisco wrote in a note. They added that AI-related orders exceeded $1 billion, with revenue starting to increase in the first half of 2025.

Cisco’s core networking business, which includes routers and switches, has struggled since large companies began moving to cloud computing. Cisco’s sales have been partially offset by recurring revenue from its software and securities businesses.

Cisco said in a statement Record keeping The company is implementing a restructuring plan, including job cuts, which will result in a $1 billion pre-tax charge to its financial results and “enable it to invest in key growth opportunities and improve the efficiency of the business.”

Chief Executive Officer Chuck Robbins told CNBC’s “Squawk on the Street” on Thursday that the company will try to move some of the employees to other positions within the company.

“One of the big questions we discuss is, will everyone assume this is driven by AI?” Robbins said, adding that one aspect of AI is that automation systems can be used to make mundane and administrative tasks more efficient.

This is Cisco’s second major layoff this year. In February Cisco announced that it will cut 5% of its workforce, or more than 4,000 jobs. Before the initial layoffs, Cisco had 84,900 employees at the end of fiscal 2023.

— CNBC’s Michael Bloom and Ari Levy contributed to this report.

watch: Cisco CEO Chuck Robbins discusses fourth quarter results