Cisco Reports $48.7B in Revenue, Trims Workforce

2016 was a profitable year for the networking vendor, but the market is changing

By Sean Michael Kerner | Posted Aug 18, 2016
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The ongoing transition in IT toward a more software-defined approach to all forms of IT is putting pressure on networking vendor Cisco. Cisco reported fourth quarter and fully year fiscal 2016 earnings on August 17, with a somewhat pessimistic view of future growth and job cuts to match.

For the fourth quarter, Cisco reported revenue of $12.6 billion, for a two percent year-over-year gain. Net income for the quarter was reported at $2.8 billion, for a 21 percent gain over the fourth quarter of fiscal 2015. Full year fiscal 2016 revenue was reported at $48.7 billion, for a three percent gain over fiscal 2015. Looking forward to the first quarter of fiscal 2017, Cisco provided guidance for revenue growth to be in the range of minus one percent to plus one percent year-over-year.

As part of Cisco's earnings announcement, the company also announced a restructuring plan that will eliminate seven percent of the jobs in Cisco's global workforce. That percentage translates into approximately 5,500 jobs lost. The cuts will occur over the first quarter of fiscal 2017.

"Today we announced a restructuring enabling us to optimize our cost base and lower growth areas of our portfolio and further invest in key priority areas, such as security, IoT, collaboration, next generation data center and cloud," Cisco CEO, Chuck Robbins said on his company's earnings call.

The job cuts are all part of the shifting nature of Cisco's business, which was once dominated by networking hardware.

"We believe we will transition more of our revenues to a software- and subscription-based model and accelerate our shift across our portfolio," Robbins said.

Cisco's fourth quarter switching revenue was reported at $3.8 billion for a two percent year over year gain. Routing revenue for the quarter came in at $1.9 billion for a six percent decline over the fourth quarter of fiscal 2015.

In contrast, Cisco's security business is growing rapidly, with fourth quarter revenue reported at $540 million, up by 16 percent year-over-year.

"Over the past year, we've demonstrated tremendous success and rapidly deploying Cisco's advanced threat solutions to our global customer base with our amp solution now deployed at over 17,000 customers around the world," Robbins said. "As we have done in the advanced threat market, we are now deeply focused on winning in the next generation firewall market."

Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist

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