Cisco confirmed it is planning to cut thousands of jobs, totaling 7% of its global workforce, after reporting declining revenue for the third quarter in a row. The company’s results were better than expected, however, and shares jumped on the news. Cisco already cut 5% of its workforce earlier this year as part of a restructuring. It had about 85,000 employees at the end of 2023, before the layoffs began. The router maker has struggled with weak demand and supply chain issues but lately tried to diversify, acquiring cybersecurity firm Splunk in a $28 billion buyout. – LinkedIn News
Things happen and this world transforms. Many years ago, Cisco was at its peak. Yes, a CV with CCNA (Cisco Certified Network Associate) was a blessed one, because suitors of employers would come along. Move it higher in the certification hierarchy, you may be going to America, from any city in Africa. In banking, three of my colleagues left within weeks (Aha…, Uwa…, Gbe…), and they left in big ways: American recruiters sent them visas via FEDEX!
But that Cisco has faded. Yes, software ate Cisco. Buying networking equipment is the old-stuff business model. You can only earn new revenue on existing deals when the customer returns to replace the equipment. Today, Wall Street likes recurring revenue where provided the customer is using that product, you would be earning money via subscriptions or licensing in perpetuity.
That perpetuity revenue was not the business model which Cisco ran on. It was like the Nokia feature phone where you pay and own, unlike the Apple iPhone where besides the hardware, Apple will still make money via the App Store apps. That is why Cisco is bleeding: “Cisco has announced plans to slash thousands of jobs as part of its strategic shift towards AI and cybersecurity. The move comes as the tech giant refocuses its efforts on emerging technologies, aligning its workforce with its new priorities. The proposed second round of layoff is coming after the company in February this year, laid off 5% of its global workforce.”
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But it does seem like Cisco is modulating: “Notably, Cisco has also been working to establish itself as an Al networking vendor…the company announced a series of hardware and software platforms developed in collaboration with Nvidia designed to peddle its Ethernet kit to enterprises deploying GPU clusters …” Possibly, upon that business model, it can make money via how modern enterprise tech companies make money: perpetual licensing where you keep sending them money in seasons and out of seasons.
Re-invent that business model – and thrive.
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