Cisco’s latest quarter leaves much to be desired. According to the organization, the disappointing figures are a consequence of COVID lockdowns in China and the war in Ukraine. Shortly after the presentation, Cisco’s share price fell by 19 percent.
In the third and latest quarter of Cisco’s fiscal year, total revenue remained at $12.8 billion, the same number as in 2021. Product sales increased by a meagre three percent.
Cisco is well aware of the disappointment. Stagnant sales are a sweeping sign for investors. Cisco CEO Chuck Robbins explained the standstill during the presentation.
“The first factor is the war in Ukraine which resulted in us ceasing operations in Russia and Belarus and had a corresponding revenue impact. The second relates to the COVID-related lockdowns in China, which began in late March. These lockdowns resulted in an even more severe shortage of certain critical components.”
The CEO added that the lockdown of Shanghai, a key city for Cisco, will be lifted on June 1. Nevertheless, Robbins cannot guarantee that the figures will rise from that point onwards. According to the CEO, there’s much uncertainty as to when the supply chain will recover. And even when the time comes, Robbins expects fierce competition. “We believe that there’s going to be lots of competition for ports and airport capacity”, he added.
Shortages
Cisco depends on 41,000 unique components to offer all products in its hardware portfolio. 250 of these components are tainted by shortages. “Our supply-chain team is aggressively pursuing multiple options to close those shortages”, Cisco CFO Scott Herren added.
As mentioned earlier, the news caused Cisco’s share price to drop by 19 percent. Competitors were hit as well. Investors believe the causes of Cisco’s stagnant figures to be relevant for the entire market. As a result, the share prices of Juniper, Ciena and Arista respectively fell by 10 percent, 9 percent and 6 percent.