Cisco’s stock rises on strong quarterly sales and guidance, but a restructuring is coming

Cisco Systems Inc.’s stock rose in extended trading Wednesday after the networking-technology company delivered better-than-expected numbers on the top and bottom line, and offered encouraging guidance.

Still, Cisco Chief Financial Officer Scott Herren announced a “limited business restructuring,” to be shared with employees on Thursday, that will right-size its real-estate portfolio and impact about 5% of its 80,000 workers worldwide — or 4,000 people. “This is about rebalancing across the board,” he said, adding that as many jobs will be added as reduced.

“Our goal is to minimize the number of people who end up having to leave,” Herren told MarketWatch. “We will match as many with new roles at the company as we can. This is not about reducing our workforce — in fact we’ll have roughly the same number of employees at the end of this fiscal year as we had when we started.”

Cisco
CSCO,
-1.14%
reported a fiscal first-quarter net income of $2.7 billion, or 65 cents a share, compared with net income of $3 billion, or 70 cents a share, in the year-ago quarter. Adjusted earnings were 86 cents a share. Revenue was $13.6 billion, up 6% from $12.9 billion a year ago.

Analysts surveyed by FactSet had expected on average net income of 84 cents a share on revenue of $13.3 billion. Shares gained more than 5% in after-hours trading immediately following the results, after closing down 1% in regular trading Wednesday at $44.39.

“Our fiscal 2023 is off to a good start as we delivered the largest quarterly revenue and second-highest quarterly non-GAAP earnings per share in our history,” Cisco Chief Executive Chuck Robbins said in a statement announcing the results. During a conference call with analysts late Wednesday, Robbins noted “modest improvement” in component delivery amid an easing supply-chain pipeline.

Cisco’s Product ($10.25 billion) and Service ($3.39 billion) businesses were up slightly year over year. Secure, Agile Networks, the company’s top business segment…

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