Cisco is set to implement a second wave of layoffs this year, affecting thousands of employees, as the U.S. networking equipment manufacturer redirects its focus towards higher-growth sectors such as cybersecurity and artificial intelligence, according to sources familiar with the situation.

The number of employees impacted may be comparable to or slightly exceed the 4,000 individuals laid off in February, with an announcement expected as early as Wednesday alongside the company’s fourth-quarter financial results. These sources, who requested anonymity, were not authorized to disclose this information publicly.

Reuters had previously reported on the job cuts that Cisco, based in San Jose, California, announced in February before the official announcement was made.

As of July 2023, the company employed approximately 84,900 individuals, a figure that does not include the February layoffs. Cisco has not yet responded to requests for comment. Following the initial report by Reuters, the company's shares declined by nearly 1%, and the stock has fallen over 9% this year as of Thursday's market close.

As the leading manufacturer of routers and switches that manage internet traffic, Cisco has been facing challenges due to weak demand and supply chain issues within its core business.

This has prompted the company to diversify its operations, exemplified by its $28 billion acquisition of cybersecurity firm Splunk, completed in March. This acquisition aims to lessen its dependence on one-time equipment sales by enhancing its subscription-based revenue model.

Cisco has also been actively integrating AI products into its portfolio and reaffirmed its goal of achieving $1 billion in AI product orders by 2025. In June, the company established a $1 billion fund to invest in AI startups, including Cohere, Mistral AI, and Scale AI, and noted that it had made 20 acquisitions and investments focused on AI in recent years.

The layoffs at Cisco are part of a broader trend in the technology sector, which has seen significant cost-cutting measures this year in response to substantial investments in AI. According to data from the tracking website Layoffs.fyi, over 126,000 employees have been laid off across 393 tech companies since the beginning of the year.

Earlier in August, chipmaker Intel cut over 15% of its workforce, or some 17,500 people, as it tried to turn around its money-losing manufacturing business.

Cisco, (Commercial and Industrial Security Corporation) a global leader in information technology and networking solutions, specializes in providing comprehensive networking assistance to businesses of all sizes. Its expertise lies in facilitating seamless connectivity, interaction, and collaboration within organizations, enabling them to thrive in the digital age.