Cisco Systems (CSCO) shares opened lower Thursday morning. The tech giant reported better-than-expected fiscal second-quarter results. However, the company reduced its full-year guidance and is cutting about 5% of its workforce, more than 4,000 employees, on demand concerns. CEO Chuck Robbins said on the earnings call that the company is seeing "a greater degree of caution and scrutiny of deals given the high level of uncertainty" surrounding the macro-environment.

Yahoo Finance Executive Editor Brian Sozzi breaks down the results and what Wall Street is saying about them.

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Editor's note: This article was written by Stephanie Mikulich

Video Transcript

RACHELLE AKUFFO: Cisco shares taking a hit in the premarket after slashing its full-year guidance and announcing layoffs that will impact 5% of its workforce, amounting to about 4,000 employees. Yahoo Finance's Executive Editor Brian Sozzi is here to break this down for us. Give us some context here, Brian.

BRIAN SOZZI: Yeah, well, unfortunately, I don't have much in the way of positive things to say about this quarter from Cisco. So let me just check through some of them. Really, everything you don't want to hear from a big-cap tech company. Cisco served up last night on its earnings day. Talked about slowing demand or worse-than-expected demand and ongoing inventory correction, which may not improve in the second half of this year.

Talk of large telecoms perhaps not really aggressively investing in their business until 2025. And then last but not least, Cisco came in here and said they will sack 4,200 employees to improve their profit margins because demand is, in fact, slowing. But don't take my word for it. Here's what Chuck Robbins, chair and CEO of Cisco, had to say about the quarter.

CHUCK ROBBINS: First, in terms of the macro environment, we are seeing a greater degree of caution and scrutiny of deals given the high level of uncertainty. As we're hearing this from our customers, it's leading us to be more cautious with our forecast and expectations.

Second, as we discussed last quarter and subsequently saw in other technology provider results, customers have been taking time since the start of our fiscal 2024 to deploy the elevated levels of products shipped to them in recent quarters and this is taking longer than our initial expectations. Third, we also continue to see weak demand with our telco and cable service provider customers."

BRIAN SOZZI: All right, so the vibe on the street, guys, is that for the second consecutive quarter, Cisco really, I think, surprised a lot of folks on the Street, resetting guidance, telling folks, we cannot deliver up to the expectations we set previously. And there are some of those vibes on the Street. I think the Jefferies team, I think it was Chris Nodder, really letting Cisco have it, noting on his second trip through the inventory correction confessional.