Cisco shares head for best day since 2020 on earnings beat, plans to cut 7% of workforce

Core Insights - Cisco shares surged approximately 8% following the announcement of a 7% workforce reduction and quarterly results that exceeded analyst expectations [1][2] - The company reported $13.64 billion in revenue for the quarter, surpassing Wall Street's forecast of $13.54 billion, although this represented a 10% decline year-over-year [1][2] - Net income fell 45% compared to the previous year, yet still exceeded profit expectations [1] Financial Performance - Cisco's revenue decline marks the third consecutive quarter of sales decreases [1] - Networking sales dropped 28.1% year-over-year, attributed to challenging comparisons, but there was a notable recovery in order numbers [2] - Data center switching orders increased by double digits year-over-year, while campus switching and routing orders rose in the high single digits [2] Restructuring and Workforce Changes - The company is implementing a restructuring plan that will incur $1 billion in pretax charges, aimed at investing in growth opportunities and enhancing operational efficiency [3] - This marks the second significant round of layoffs in 2023, following a previous reduction of 5% of the workforce, equating to over 4,000 jobs [3] - Cisco had 84,900 employees at the end of fiscal 2023 prior to the layoffs [3] Strategic Focus - Orders related to artificial intelligence surpassed $1 billion, with revenue expected to ramp up in the first half of 2025 [2] - The CEO indicated that the company aims to utilize AI to improve efficiency in general and administrative tasks through automation [3]