Cisco reports earnings beat, announces 7% workforce reduction.

• On Thursday, Cisco shares experienced a surge and reached their best performance since March 2020.
• The company announced on Wednesday that it will be cutting 7% of its workforce and reported quarterly results that surpassed analyst expectations.
• Cisco exceeded Wall Street estimates with its $13.64 billion in quarterly revenue.

On Thursday, shares of the computer networking company experienced an 8% increase and were on track for their best day since March 2020, following the company's announcement of cutting 7% of its workforce and reporting quarterly results that surpassed analyst expectations.

Cisco's results were better than anticipated, according to Morgan Stanley analysts.

The analysts recommended buying Cisco's stock after the company's FQ4 beat and better-than-expected order numbers supported a return to more predictable patterns after four years of disruption.

Cisco reported $13.64 billion in revenue for the quarter, surpassing Wall Street estimates of $13.54 billion. Despite a 10% decline in revenue from the previous quarter, this was the third consecutive quarter of sales decreases. Net income dropped 45% from the prior year, but still managed to exceed expectations.

The decline in networking sales at Bank of America, which was 28.1% year-over-year, was mainly due to challenging comparisons, according to analysts. However, they emphasized that the focus of the quarter was on order recovery.

The number of data center switching orders increased by double digits year-over-year, while campus switching and routing orders also saw significant growth, according to a report by analysts who have a buy rating on Cisco. Additionally, the report stated that orders related to artificial intelligence reached $1 billion and revenue is expected to begin ramping up in the first half of 2025.

Cisco's core networking business has been struggling since large companies started moving to the cloud, but its sales have been partially offset by recurring revenue from its software and securities businesses.

Cisco announced a restructuring plan with layoffs that will result in $1 billion in pretax charges to its financial results, allowing it to invest in key growth opportunities and drive more efficiencies in its business.

Cisco has announced its second major round of layoffs this year, with the company stating in February that it would be cutting 5% of its workforce, or approximately 4,000 jobs. This follows the initial cuts made at the end of fiscal 2023, which left Cisco with 84,900 employees.

— CNBC's Michael Bloom and Ari Levy contributed to this report.

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