Cisco lays out restructuring plan as coronavirus crisis forces clients to hold spending

In earnings call company also said CFO Kelly Kramer will retire

Cisco Systems Inc on Wednesday forecast first-quarter revenue and profit below Wall Street estimates and laid out a restructuring plan, as the coronavirus crisis forced its clients to hold back spending.

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CISCO COMMITTING $225M TO GLOBAL CORONAVIRUS RESPONSE

Shares of the top network equipment maker fell nearly 5% after the bell.

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The restructuring, which includes a voluntary early retirement program and layoffs, will begin this quarter, the company said, adding that it expected to recognize a related charge of about $900 million.

On a conference call with investors, Chief Executive Chuck Robbins said Cisco also plans to reduce its expenses by $1 billion on an annualized basis "over the next few quarters."

Cisco did not specify how many jobs would be cut, but the move follows several previous rounds of layoffs as the company has moved to generate half of its revenues from software, milestone executives said was achieved in the fiscal fourth quarter.

CISCO STARTS NEW ROUND OF JOB CUTS DUE TO SLOWING SALES

The company also announced that Chief Financial Officer Kelly Kramer will retire from Cisco, but will remain with the company until a successor is found.

Cisco expects current-quarter revenue to drop between 9% and 11% from last year, implying a range of between $11.71 billion and $11.97 billion, while analysts had expected $12.25 billion.

It also forecast adjusted earnings of 69 cents to 71 cents per share, below estimates of 76 cents, according to Refinitiv IBES data.

The pandemic has forced some of Cisco's clients, particularly in hard-hit sectors such as retail, to pause on big spending to conserve cash, piling more pressure on its core business of selling routers and switches.

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For the fiscal fourth quarter ended July 25, revenue fell about 9% to $12.15 billion, but beat estimates of $12.08 billion, as more people working from home during lockdowns boosted demand for its web security and teleconferencing tools.

Excluding items, Cisco earned 80 cents per share in the quarter, beating estimates of 74 cents.

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