The networking giant announced thousands of layoffs as part of a restructuring move aimed at helping shift resources to continue its investments in strategic areas as advanced AI, security, and quantum networking technology, the company said during its third fiscal quarter 2026 financial analyst conference call.
Cisco Wednesday said it is initiating a corporate restructuring that will result in layoffs of less than 4,000 of its employees.
Cisco Chair and CEO Chuck Robbins, in his prepared remarks for financial analysts during the company’s fiscal third quarter 2026 quarterly conference call, unveiled the restructuring plan aimed at focusing resources on strategic areas.
“To ensure we are capturing the significant opportunities in silicon, optics, security, and AI, we announced a restructuring plan today to reallocate resources and allow us to invest in these key growth areas,” Robbins said. “These actions are building from a position of strength and focusing on the technologies that will accelerate our growth deliver unmatched innovation to customers and partners and define our future.”
[Related: Cisco Reinstates Compute Deal Registration; Partners Cheer Reversal]
Robbins, in a blog posted Wednesday afternoon on Cisco’s website, wrote that the IT industry is facing a complex environment, and that companies looking to grow need to shift investment towards those areas with strong demand and long-term value creation.
“This means making hard decisions – about where we invest, how we’re organized, and how our cost structure reflects the opportunity in front of us,” he wrote. “With this, we are making changes today that will result in the reduction of our overall workforce in Q4 by fewer than 4,000 jobs, representing less than 5 percent of our total employee base. Most notifications will begin on May 14 and continue globally in alignment with applicable local laws and regulations.”
At the same time, Robbins wrote, Cisco is making other strategic investments to grow the company.
“While we are reducing roles in some areas, we are making clear, strategic investments – particularly in silicon, optics, security, and in our employees’ use of AI across the company,” he said. “These investments are building from a position of strength – and focusing on the technologies and businesses that will accelerate our growth, deliver unmatched innovation to customers and partners, and define our future.”
In a regulatory filing, Cisco said it will recognize pre-tax charges to its GAAP financial results of up to $1 billion consisting of severance and other one-time termination benefits, and other costs. The company said it expects to recognize approximately $450 million of these charges in the fourth quarter of fiscal 2026 with the remaining amount expected to be recognized during fiscal 2027.
A restructuring at Cisco is certainly a concern, said Lane Irvine, director of strategic alliances at Long View Systems, a Calgary, Alberta-based solution provider and Cisco channel partner.
“As you look at a lot of the tech companies doing restructuring, AI is having an impact on how they manage their business and how they reduce costs,” Irvine told CRN. “Certainly the public markets are putting the biggest pressure probably on that, as opposed to driving profitability.”
It is also absolutely a concern for partners, Irvine said.
“Cisco is definitely one of the top partners in how they support the channel and the work we do,” he said “But they’re definitely kind of moving more towards the mainstream where there is less support and there is a higher expectation for partners to execute on the customer onboarding, customer support, and customer success components. They’re pushing more of that responsibility to the partners. It’s something we’ve got to watch carefully.”
Cisco has a lot of competitive pressures in the market right now with other vendors stepping up in their specific areas, Irvine said.
“Cisco’s got a really strong end-to-end story, but they’ve got to make sure they’re able to stay competitive from a price perspective,” he said. “And to do that, of course they have to reduce their overhead costs. There’s obviously two sides to it. We’re certainly cautious on the partner side and partner support. But we’re definitely looking forward to some price decreases that will create a more competitive environment for Cisco.”
Cisco continues to invest in strategic opportunities such as AI, Robbins said.
For instance, he said Cisco earlier this week said it is open sourcing the Foundry Security Spec, a production-grade blueprint for building scalable agentic security evaluation systems using both available and new AI models.
“We are providing this blueprint to customers to accelerate their ability to take advantage of agentic AI and stay ahead of adversaries,” he said.
Cisco IQ, the company’s unified AI-powered delivery engine for Cisco services, is now generally available with more than 250 customers already onboarded, Robbins said.
“Cisco IQ provides customers with a real-time benchmark view of Cisco assets and configurations in their environment, helping to future-proof it against emerging architectural threats,” he said.
Cisco is also accelerating AI advancements internally for its teams, Robbins said.
“CIRCUIT, our proprietary AI assistant, is now fully embedded in how Cisco operates, with near universal adoption across our employee base and over 8 million total quarterly interactions. CIRCUIT leverages a network of advanced third-party AI models, automatically choosing the best engine for every task, or letting users make that choice. As a founding design partner with OpenAI on Codex, our engineers have been using it from the beginning, and as of this week we have made Codex available to our entire product organization to enable them to build tools and reimagine new products at unprecedented speed.”
Cisco has also made progress in the area of quantum networking, Robbins said.
“We recently introduced a working research prototype of the Cisco Universal Quantum Switch designed to route and preserve quantum information between systems at room temperature and over standard telecom fiber,” he said. “By building this infrastructure now, we are helping to accelerate the entire quantum ecosystem that will power the data centers of the future.”
For its third fiscal quarter 2026, which ended April 25, Cisco reported total revenue of $15.84 billion, up 11.9 percent over the $14.15 billion the company reported for its third fiscal quarter 2025.
That included product revenue of $12.12 billion, up from last year’s $10.37 billion, and services revenue of $3.74 billion, down from $3.78 billion.
On the product side, networking accounted for $8.82 billion in revenue, up 25 percent; security for $2.01 billion, flat over last year; collaboration for $1.02 billion, down 1 percent, and observability for $269 million, up 3 percent.
Cisco’s Americas business accounted for $9.60 billion, up 14 percent year-over-year.
Cisco also reported GAAP net income of $3.37 billion or 85 cents per share, up significantly from last year’s $2.49 billion or 62 cents per share.
On a non-GAAP basis, Cisco reported net income of $4.23 billion or $1.06 per share, up from last year’s $3.83 billion or 96 cents per share. That beat analyst expectations by 2 cents per share, according to Seeking Alpha.
