Money saved on the cuts will be plowed-back into priority businesses such as security, Internet of things, collaboration, next-generation data center gear and cloud, Cisco chief executive Chuck Robbins said on the earnings call. It’s unclear from that list what, exactly, are low-priority areas, however. Presumably they include Cisco’s older line routers and switches.
That there would be job cuts at a legacy IT provider is almost a forgone conclusion as these companies, many of which made the bulk of their money on pricey, proprietary hardware and software, must adapt to a world in which more companies send more of their computing jobs to a public cloud provider like Amazon @amzn(amzn)Web Services.
Adding insult to injury, big public cloud providers, which rent out their computing capacity to customers, don’t tend to buy name-brand hardware from companies like Cisco or IBM.
The job cuts will start this quarter, the company said.
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For the quarter, Cisco reported earnings of $2.8 billion, or 56 cents a share, on sales of $12.64 billion. Non-GAAP earnings were $3.2 billion or 63 cents per share, beating analyst expectations of 60 cents per share.
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Cisco shares were off about 1% to $30.40 in after hours trading.
This story was updated during and after the Cisco earnings call.