New mass layoff sends California job losses soaring

Bay Area tech giant Cisco Systems has announced a second major round of layoffs this year as it refocuses the company toward growing areas such cybersecurity and artificial intelligence (A.I.), cutting 7 percent of its workforce in the process.

While it’s unclear exactly how many of the San Jose-based company’s employees will be let go, the number is expected to be similar to the 4,000 employees Cisco dismissed in February as part of its restructuring plan, or even higher. KCRA-TV estimated that the company will cut as many as 5,900 jobs.

As of July 2023, the Californian tech giant employed around 84,900 employees, according to its annual filing. That was before the company’s layoffs in February, which means that the company possibly employs 80,900 people. This number is now expected to dwindle even further.

Newsweek contacted Cisco for comment by email on Friday morning.

The announcement comes on the back of reports of slowing demand for Cisco’s products and supply-chain constraints affecting the company’s core business.

In its latest quarterly results, Cisco reported $13.64 billion in revenue, down 10 percent from the year-ago quarter and the third straight quarter of sales declines. Despite plunging net income—down 45 percent from a year earlier—the company’s profits still exceeded Wall Street’s expectations of $13.54 billion.

As of Friday morning, Cisco shares were down 3.92 percent year-to-date and 8.36 percent year-over-year, according to Google Finance. But following the announcement of the second round of layoffs, Cisco shares jumped 7 percent on Thursday—their best day since November 2020—which shows investors are optimistic about the company’s move.

Talking to CNBC’s Squawk on the Street on Thursday, Cisco CEO Chuck Robbins said that the tech giant will try to move some of the laid off employees into other jobs within the company.

“We’ll do skills-matching, some of these people that are in that 7 percent actually won’t leave the company, they’ll move in some of these roles that their skills match,” Robbins said. “We built this process over the past seven-eight years to try to make sure we’re doing that, so that is the intent.”

He added, talking about the restructuring: “This is about investment and efficiency. We shifted hundreds of millions of dollars into these fast-moving markets.”

The CEO said that “it’s very hard to say” whether the company will have more layoffs in the future, but said that “that would be our intent and desire.”

Cisco’s announcement comes after the tech industry has already faced major layoffs this year. Only two weeks ago, chipmaker Intel Corp. announced it will be cutting roughly 15,000 jobs after disappointing earnings this year.

These layoffs are significantly affecting California, where many of the biggest tech companies in the country are based. According to Layoffs.fyi, which monitors redundancies in the tech industry, 130,482 employees working in the tech sector had been laid off this year by 398 companies.

WarnTracker, a website which monitors layoffs across the country in all industries, reports that 18,439 people were laid off this year in California alone—the highest rate in the country, followed by Texas with 15,914.

Newsweek contacted the California Department of Labor for comment by email on Friday morning.