Cisco announced a sweeping restructuring that will cost up to $1 billion in severance and one‑time termination benefits. The move trims headcount as the networking giant pivots toward higher‑margin segments such as silicon, optics, security and AI infrastructure. The announcement coincided with its latest earnings release, where the company lifted full‑year guidance on the back of robust revenue and earnings.

Analysts see the cut as a hedge against slowing demand for traditional networking gear while freeing cash to invest in fast‑growing technologies. By shedding lower‑profit lines, Cisco aims to sharpen its focus on components that power data‑center and edge AI workloads, markets projected to expand rapidly. The restructuring also signals confidence that its new product portfolio can offset the short‑term expense of the layoff program.

Investors reacted positively, with the stock edging higher after hours as the guidance upgrade offset concerns over the restructuring cost. The $1 billion outlay is a one‑time charge, but the longer‑term payoff hinges on Cisco’s ability to capture AI‑related spend from cloud providers and enterprises. The company now positions itself as a critical supplier in the emerging AI hardware ecosystem.