Cisco Systems announced a restructuring plan on Wednesday saying it would cut 7% of its global workforce, while also lowering its annual revenue target. The California-based company plans to invest in key growth opportunities and drive more efficiencies.

It estimates it will recognize pre-tax charges of up to $1 billion in connection with the plan, with $700 million to $800 million of these charges being recognized in the first quarter.

This is the second round of layoffs likely to affect 6, 000 employees. Earlier in February, the company said it would layoff 5% of its workforce amounting to more than 4,000 jobs.

The layoffs allow Cisco to “maintain focus on growth areas such as software, services, AI and cybersecurity, while balancing its financial obligations and reducing the percentage of hardware in its product mix”, according to Michael Ashley Schulman, chief investment officer at Running Point Capital.

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The company bought cybersecurity firm Splunk last year for $28 billion in its biggest purchase ever while also launching a $1-billion fund in June to invest in AI startups such as Cohere, Mistral AI and Scale AI as it moves to capitalise on the AI boom

Cisco reported revenue of $13.64 billion for the fourth quarter ended July 27, compared with an estimate of $13.54 billion.

The company’s sales have fallen for a third consecutive quarter with its core networking business, including switches and routers trending downward as businesses started shifting to the cloud.

Cisco had 84,900 employees at the end of 2023, before the job cuts.