SAN JOSE, California: Amid a slowing economy, Cisco Systems says that it will cut 5 percent of its global workforce or more than 4,000 jobs, as well as lower its annual revenue target to between US$51.5 billion and $52.5 billion from an earlier forecast of $53.8 billion to $55 billion.

CEO Charles Robbins said during a conference call, “We also continue to see weak demand with our telco and cable service provider customers.”

As telecom clients restrict spending and prioritize clearing excess inventory of networking gear, demand for Cisco’s products is expected to remain under pressure.

Joe Brunetto, analyst at Third Bridge, said the networking hardware inventory pile-up should be resolved in the second half of 2024 or early 2025.

In response, Cisco is focusing on artificial intelligence (AI) and partnership with Nvidia to boost growth.

Nvidia agreed to use Cisco’s ethernet with its own technology that is widely used in data centers and AI applications, Cisco CEO Robbins said.

According to LSEG data, Cisco expects a third-quarter revenue of between $12.1 billion and $12.3 billion, below forecasts of some $13.1 billion.

Reuters reported that the company, which has 85,000 employees, was planning layoffs and restructuring to focus on high-growth areas.

In the second quarter, Cisco recorded an adjusted profit of 87 cents per share and revenue of $12.79 billion, according to LSEG estimates.