In a move to streamline operations and cut costs, Cisco Systems, a leading technology company, has announced its decision to downsize its workforce, resulting in the elimination of approximately 4,250 jobs. This reduction accounts for around 5% of the company's total employees. The news comes as Cisco revealed its quarterly and full-year forecasts, which fell short of expectations.

Following the announcement, Cisco's shares experienced a decline of 5% in extended trading. The company joins the ranks of other tech giants that have chosen to downsize this year, as the industry continues to grapple with the ongoing effects of the market downturn observed two years ago. Notably, January witnessed a high number of job cuts in the sector, with major players such as Alphabet, Amazon, Microsoft, SAP, eBay, Unity, and Discord all announcing their plans to eliminate positions.

According to data from the website Layoffs.fyi, a total of 144 tech companies have laid off nearly 35,000 workers since the beginning of the year. These widespread layoffs suggest a concerted effort within the industry to optimize costs and streamline operations in a rapidly changing market.

Despite the downsizing announcement, Cisco reported strong fiscal second-quarter results. However, the company's revenue declined 6% year over year during the quarter, ending on January 27. Net income also saw a decrease, falling to $2.63 billion, or 65 cents per share, compared to $2.77 billion, or 67 cents per share, in the same period the previous year.

In addition to the job cuts, Cisco provided a lighter forecast for its future performance. CEO Chuck Robbins attributed the challenges to the current macroeconomic environment, mentioning greater caution and scrutiny of deals among customers due to the high level of uncertainty. Furthermore, the company acknowledged that customers have been slower in deploying products shipped to them in recent quarters, exceeding initial expectations.

Cisco's anticipated $28 billion acquisition of monitoring and security software maker Splunk remains pending. Robbins stated that the deal is likely to be finalized late in the first calendar quarter or early in the second quarter.

Looking ahead, Cisco provided guidance of 84 to 86 cents per share on revenue ranging from $12.1 billion to $12.3 billion. Analysts polled by LSEG had projected 92 cents per share on $13.09 billion in revenue. For the full year, Cisco expects adjusted earnings per share between $3.68 and $3.74, with revenue in the range of $51.5 billion to $52.5 billion.

Amidst the circumstances, demand from telecommunications and cable service provider clients remains sluggish, as highlighted by Robbins during the conference call with analysts. As the company faces ongoing market challenges, it aims to navigate the uncertain landscape with caution and adaptability.

This is a developing story, and further updates will be provided as additional information becomes available.

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