Cisco Lifts FY26 View After Strong Q3, Plans Around 4,000 Job Cuts; Stock Climbs

(RTTNews) - Shares of Cisco Systems Inc. were climbing around 20 percent in the overnight trading and are up 17 percent in pre-market activity on Nasdaq after the tech major raised fiscal 2026 outlook following double-digit growth in top and bottom-line in its third quarter. Further, amid the AI-focused restructuring, the firm announced a reduction of fewer than 4,000 jobs in the fourth quarter, representing less than 5 percent of its total employee base.

In an email to Cisco employees, Chair and Chief Executive Officer Chuck Robbins said, "The companies that will win in the AI era will be those with focus, urgency, and the discipline to continuously shift investment toward the areas where demand and long-term value creation are strongest. … 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."

According to the firm, the developments come in a complex operating environment of rapidly changing market, with intensifying competition, and a global shortage of components critical to support its portfolio and the AI buildout from our customers.

Regarding the planned workforce reduction, the company noted that it is reducing roles in some areas, but making clear, strategic investments in other areas, particularly in silicon, optics, security, and in employees' use of AI across the company. It will focus on the technologies and businesses that will accelerate growth and deliver unmatched innovation.

Most notifications for the job cuts will begin on May 14 and continue globally in alignment with applicable local laws and regulations.

For the impacted employees, leaders will share details directly, including timing, available resources, support, and benefits in each country. This will include pro-rated payment of fiscal 2026 bonuses to impacted employees.

The company added that it will provide support in finding new opportunities, whether internal or external, through Cisco's placement services, and also provide continued personalized learning.

Looking ahead for the fourth quarter, Cisco projects earnings per share of $0.80 to $0.85, adjusted earnings per share of $1.16 to $1.18, and revenue of $16.7 billion to $16.9 billion.

Further, for fiscal 2026, the company now projects earnings per share of $3.16 to $3.21, adjusted earnings per share of $4.27 to $4.29 and revenues of $62.8 billion to $63.0 billion.

Previously, the company had expected earnings per share of $3.00 to $3.08, adjusted earnings per share of $4.13 to $4.17 and revenues of $61.2 billion to $61.7 billion.

With significant momentum, the firm raised expectations for AI infrastructure from hyperscalers, and now expects annual revenue to be $4 billion, up from $3 billion, and orders to be $9 billion, up from $5 billion expected earlier.

In addition, Cisco has declared a quarterly dividend of $0.42 per common share to be paid on July 22, to all stockholders of record as of the close of business on July 6. Future dividends will be subject to Board approval.

In the third quarter, Cisco's net earnings came in at $3.37 billion, up 35 percent from $2.49 billion last year. Earnings per share climbed 37 percent to $0.85 from $0.62 a year ago.

Adjusted earnings were $4.22 million or $1.06 per share for the period, compared to $3.8 billion or $0.96 per share a year ago.

The company's revenue for the period rose 12 percent to $15.84 billion from $14.14 billion last year. Product revenue climbed 17 percent, while services revenue was down 1 percent.

In the overnight trading, the shares were gaining around 20 percent to trade at $122.19 after closing Wednesday's regular trading 2.6 percent higher.

In pre-market activity on Nasdaq, the shares are currently trading 16.7 percent higher at $118.92.

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