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Reducing memory requirements to control costs in a new wave of kit
Cisco will make around five percent of staff redundant and has generously offered them free Cisco training for a year once they’re gone.
CEO Chuck Robbins broke the news in a Wednesday blog post titled “Our Path Forward” that opens “Today we announced our Q3 FY26 earnings with record revenue of $15.8 billion, up 12 percent year over year, and double-digit top and bottom-line growth. The ELT [executive leadership team] and I could not be prouder of the growth you have all delivered for Cisco.” That growth included net income growing 35 percent to $3.4 billion.
Yet Robbins’ pride was not sufficient for all Cisco staff to keep their jobs.
The CEO said the layoffs are necessary because “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.”
For Cisco that means “reducing roles in some areas” and also “making clear, strategic investments – particularly in silicon, optics, security, and in our employees’ use of AI across the company.”
On Thursday, US time, close to 4,000 unlucky Cisco staff will be shown the door.
Robbins said Cisco will help its soon-to-be-former workers find their next gig, and that the company’s efforts to do so have a 75 percent success rate. “We are also committed to continued personalized learning and will provide one year of access to all Cisco U courses and certifications, covering AI, Security, Networking, and more,” he added.
Cisco made two big rounds of layoffs in 2024, one of which ejected seven percent of staff and the other resulted in Cisco firing five percent of employees.
The restructures appear not to have slowed the company down: Robbins said product orders in Q3 rose 35 percent year over year – a figure that encapsulates a 105 percent year-over-year surge in revenue from hyperscalers and more modest 18 percent growth from other buyers.
Robbins said Cisco has already scored $5.3 billion of AI infrastructure sales this year, and forecast full-year sales of $9 billion – 4.5 times its haul from last year.
More prosaic products, like Wi-Fi kit, also grew fast as sales rose 40 percent.
The company hopes to keep that cash flowing by building wireless kit that uses less memory.
“You’ll see products that’ll become orderable in Q4 that’ll actually require 50 percent less memory,” Robbins said, with the design work to make that possible an example of the “20-plus programs that we’ve put into place that are active to reduce the memory utilization across the portfolio.”
Cisco’s doing that despite the rising price of memory and storage not putting a dent in its margins, an outcome that execs attributed to supply chain management efforts.
Glasswing to lift security sales
Later in the earnings call, Robbins revealed that Cisco is participating in Anthropic’s Project Glasswing and using the Mythos model to test its code. The CEO said another impact of Anthropic’s bug-finding AI will be to accelerate plans to replace security appliances once other vendor’s use of Mythos finds flaw that are hard to fix.
“I actually think while there will be a security opportunity, there’s going to most likely be a lot of focus from our customers on modernizing their infrastructure so that they don’t have this risk from technology that just can’t be patched,” Robbins said.
Robbins said Cisco may have won an order or two from customers who were already close to replacing old security kit “and Mythos pushed them over the edge.” But he said Cisco didn’t receive “any meaningful orders in Q3 as a result of Mythos, but that could change in the future as we continue to work with customers.” ®
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