Photo: Bloomberg LP
Cisco Systems Inc downgrades its annual revenue forecast on Wednesday , after the blockade due to COVID in China and the war in Ukraine reduced sales below forecasts in the third quarter, which led to a collapse of shares by 13% in post-exchange trading.
The company also said that fourth-quarter revenue will fall 1% to 5.5%, becoming another US company to be affected by Beijing’s “zero COVID” policy, which has deepened supply chain difficulties and affected background demand
The company’s executives noted a serious shortage of components in the coming quarters and said revenue growth in the third quarter was affected by $ 200 million from the cessation of operations in Russia and Belarus.
Cisco, which sells network equipment and software to connect devices to the Internet, now expects revenue growth of 2% to 3% in fiscal 2022 compared to an earlier forecast of 5.5% to 6.5%.
Adjusted earnings are expected to be between $ 3.29 and $ 3.37 per share, up from $ 3.41 to $ 3.46 per share previously.
“We believe that there will be a lot of competition for port capacity, airport capacity,” CFO Scott Herren told analysts.
“Because of this, combined with the efforts for incoming supplies, attempts to return raw materials to the country, etc., we believe that it will be impossible for us to catch up with this problem in the fourth quarter. “
Unconvincing results dragged down stocks of other companies in the sector in the extended session. Shares of Juniper Networks, F5, Arista Networks and Ciena Corp depreciated by between 2.7% and 7%.
“This quarter does not seem to me to be anything more than an obstacle”, said to Reuters CFRA analyst Keith Snyder.
“Although the forecasts are disappointing, they are understandable given these headwinds. The implementation of financial results in the coming quarters depends less from demand and more from stock availability. “
Cisco reported adjusted third-quarter earnings of 87 cents a share on revenue of $ 12.8 billion , compared to expectations for 86 cents with revenues of 13.87 billion dollars, according to IBES data from Refinitiv.