- Cisco is cutting thousands more jobs
- The company is also combining three of its major units under one leader, Jeetu Patel.
- Former Networking EVP and GM Jonathan Davidson is stepping down and assuming an advisory role
Changes are afoot at Cisco. The company is combining its Networking, Security and Collaboration teams into one unit, and laying off 7% of its workforce – its second major cut of the year.
Cisco’s current Networking chief Jonathan Davidson, who has served as the division’s EVP and GM since 2022, is stepping down and assuming an advisory role. Jeetu Patel, previously EVP and GM of the Security and Collaboration units, will step into a new role as Chief Product Officer overseeing the combined operation.
Analyst Zeus Kerravala told Fierce Network that the reorganization of the networking division "is an excellent move and long overdue. For as long as I've been covering Cisco, its products had different leaders. While they did collaborate when possible, that model can create conflicting priorities, which eliminates any 'platform advantage.'"
He added that Patel is the "right person" for the CPO role given "he's made some bold decisions in collaboration and security and both of those have paid off."
Futuriom's Scott Raynovich offered a less rosy take: "The company’s networking revenue has been shrinking for years and it’s laying off 7% of its staff. It’s clear that Cisco is searching for answers and in the meantime that means cutting costs until it can find the answers.”
AvidThink Co-Founder Roy Chua said he was "frankly surprised at the announcement around Jonathan Davidson's departure" but acknowledged that the decision could just be down to product line performance. Chua pointed out that in the company's fiscal Q4 Security revenue was up 81% while Collaboration was flat, while Networking fell 28%.
"Based on my observations at Cisco Live US 2024 in Las Vegas just in June, I would have expected Jonathan to be around longer and leading the charge as Cisco unifies networking, observability, and assurance," Chua said. "In any case, this reflects a streamlining move that combines networking with security (and collaboration) which may have synergies and benefits given the ongoing convergence between network and security. It's still an unexpected move though."
Explaining the changes, Cisco CEO Chuck Robbins wrote in a blog, “This new organization will help us accelerate our product innovation and bring our portfolio together in a more integrated way than ever before. ... Further uniting our product teams is an important step toward unification and simplification and will ultimately lead to even stronger technology outcomes for our customers and partners.”
Cisco expects to take a $1 billion charge related to the job cuts, with the vast majority of that being recorded in its fiscal Q1 2025.
The announcement came as Cisco announced its fiscal Q4 2024 earnings. In its recent quarter, revenue fell 10% year on year to $13.6 billion and profit plummeted 45% to $2.2 billion.
Update 8/15/2024 9:24 am ET: This story was updated with comments from Roy Chua and Scott Raynovich.