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By Alexandria Sage and Arathy S Nair SAN FRANCISCO (Reuters) – Cisco Systems Inc said it would cut nearly 7 percent of its workforce, posting charges of up to $400 million in its first quarter, as the world's largest networking gear maker shifts focus from its legacy hardware towards higher-margin software. The gradual move to fast-growing sectors such as security, the Internet of Things and the cloud is a response to sluggish demand for Cisco's traditional lineup of switches and routers from telecom carriers and enterprise customers, amid intense competition from companies such as Huawei and Juniper Networks Inc. Savings from up to 5,500 job cuts would be reinvested into key growth areas, Cisco said. “We think this is partly an effort by (CEO) Chuck Robbins to put a stake in the ground and send a message that this is going to be a leaner, meaner Cisco that is focused on driving software and recurring revenue business,” said Guggenheim Securities analyst Ryan Hutchinson.

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(Reuters) – Microsoft Corp reported higher quarterly adjusted revenue, driven mainly by growth in the company's cloud business. The company's shares jumped 3.5 percent to $54.91 in extended trading on Tuesday. Revenue in the cloud business, which includes the Azure cloud platform as well as products related to server software, rose 7 percent to $6.7 billion. Under the leadership of Satya Nadella, the software behemoth has focused on the building the company's expertise in cloud-based services amid slowing PC sales. …

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In the attacks, a highly sophisticated form of malicious software, dubbed SYNful Knock, has been implanted in routers made by Cisco , the world's top supplier, U.S. security research firm FireEye said on Tuesday. “If you own (seize control of) the router, you own the data of all the companies and government organizations that sit behind that router,” FireEye Chief Executive Dave DeWalt told Reuters of his company's discovery. Cisco confirmed it had alerted customers to the attacks in August and said they were not due to any vulnerability in its own software.

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By Yasmeen Abutaleb SAN FRANCISCO (Reuters) – Facebook Inc is testing a personal digital assistant called “M” within its Messenger service that can answer questions with live human help and perform tasks such as buying gifts online and booking restaurants. M is “powered by artificial intelligence that's trained and supervised by people,” David Marcus, vice president of Messaging products, wrote on his Facebook page on Wednesday. Rival services like Apple Inc's Siri, Google Inc's Google Now and Microsoft Corp's Cortana rely entirely on technology to answer questions.

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By Eric Auchard, Jussi Rosendahl and Leila Abboud FRANKFURT/HELSINKI (Reuters) – Nokia is hiring software experts, testing new products and seeking sales partners as it plots its return to the mobile phone and consumer tech arena it abandoned with the sale of its handset business. Once the world's biggest maker of mobile phones, the Finnish firm was wrongfooted by the rise of smartphones and eclipsed by Apple and Samsung . It sold its handset business to Microsoft in late 2013 and has since focused squarely on making telecoms network equipment.

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Finnish telecoms network maker Nokia confirmed late on Monday that it may start designing and licensing mobile phone handsets under its brand name in 2016. Nokia said it was looking for a partner who would take on the manufacturing, sales, marketing and customer support for the products. The company said a Nokia mobile phone would not reach the market before the fourth quarter of 2016 when Nokia's agreement with partner Microsoft allows it to use the brand name again.

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By Richard Cowan WASHINGTON (Reuters) – Top U.S. tech companies are warning the Obama administration against imposing new policies that the companies say would weaken increasingly sophisticated encryption systems designed to protect consumers' privacy. In a strongly worded letter to President Barack Obama on Monday, two industry associations representing major software and hardware companies said, “We are opposed to any policy actions or measures that would undermine encryption as an available and effective tool.” The Information Technology Industry Council and the Software and Information Industry Association, representing tech giants, including Apple Inc, Google Inc, Facebook Inc, IBM and Microsoft Corp, fired the latest salvo in what could be a long fight over government access into smart phones and other digital devices.

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By Julia Fioretti BRUSSELS (Reuters) – The European Commission will take into account increased competition from cable operators and alternative services such as WhatsApp when it overhauls Europe's telecoms rules next year, a move that will be cheered by the telecoms industry. A draft seen by Reuters of the Commission's strategy for creating a digital single market says telecom operators compete with “over-the-top” services “without being subject to the same regulatory regime”. The bloc's telecom firms such as Orange and Deutsche Telekom have long called for lighter-touch regulation, after years of declining revenues and competition from new entrants, to enable them to invest in network upgrades. Telecom companies point to increased competition from services such as Skype (owned by Microsoft ) and online messaging as a reason for easing the regulatory burden.

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By Dan Levine SAN FRANCISCO (Reuters) – A U.S. appeals court appeared skeptical on Wednesday toward Google Inc's bid to charge Microsoft Corp a high royalty rate to use some of the Internet search provider's Motorola Mobility patents. Microsoft sued Motorola in 2010, alleging Motorola breached its commitment to license some of its industry standard patents on fair terms. After a 2012 trial, a Seattle federal judge found that the appropriate rate for Motorola to license certain wireless and video technology used in the Xbox game console was only a fraction of what Motorola had asked for. Google sold the Motorola handset business to Lenovo last year, but kept its patents.

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(Reuters) – Plaintiffs in an antitrust lawsuit against Google Inc on Friday withdrew their case accusing the search engine company of harming smartphone buyers by forcing handset makers using Android operating system to make Google's own applications the default option. The class action lawsuit, filed by two smartphone customers in May 2014, was dismissed on Feb. 20 by U.S. District Judge Beth Labson Freeman in San Jose, California. The lawsuit argued that Google requires Android handset manufacturers such as Samsung Electronics Co Ltd favor Google's apps such as YouTube and restrict competing apps like Microsoft Corp's Bing search.