Cisco shares have best day since 2020 on earnings beat, plans to cut 7% of workforce

Cisco shares jumped about 7% on Thursday for their best day since November 2020, after the computer networking company said it's cutting 7% of its workforce and reported quarterly results that beat analyst estimates.

Morgan Stanley analysts said in a note to investors that Cisco's results were better than feared.

"Cisco's FQ4 beat, and better than expected order numbers were a relief, and supported Cisco falling back into more predictable patterns after nearly 4 years of disruption," wrote the analysts, who recommend buying the stock.

Cisco reported $13.64 billion in revenue for the quarter, ahead of Wall Street estimates of $13.54 billion. Revenue fell 10% from the year-ago quarter, marking the third straight quarter of sales declines. Net income plummeted 45% from a year earlier, but profit still exceeded expectations.

Analysts at Bank of America noted that networking sales were down 28.1% year-over-year but said that was mostly due to tough comparisons, and that the focal point of the quarter was on order recovery.

"Data center switching orders were up double-digits YoY, while orders for campus switching and routing were up high-single digits," the analysts, who have a buy rating on Cisco, wrote in a report. They added that orders tied to artificial intelligence crossed $1 billion and revenue will start to ramp in the first half of 2025.

The company's core networking business, which includes routers and switches, has struggled since large companies started moving to the cloud. Cisco's sales have been partially offset by recurring revenue from its software and securities businesses.

Cisco said in a filing that it's implementing a restructuring plan with layoffs that will result in $1 billion in pretax charges to its financial