“These lockdowns resulted in an even more severe shortage of certain critical components,” said CEO Chuck Robbins. “This in turn prevented us from shipping products to customers at the levels we originally anticipated heading into Q3.”
Cisco Systems (CSCO) – Get Cisco Systems, Inc. Report shares plunged lower Thursday after the world’s biggest computer network equipment maker posted weaker-than-expected third quarter sales, and forecast softer near-term profits, thanks in part to supply chain disruptions that are holding back deliveries of key components.
Cisco said adjusted non-GAAP earnings for the three months ending in April, the group’s fiscal third quarter, came in at 87 cents per share, up 5% from the same period last year and a penny ahead of the Street consensus forecast. Group revenues, Cisco said, were essentially flat from last year at $12.84 billion, but missed analysts’ estimates of a $13.34 billion tally.
The group said adjusted fourth quarter profits would come in between 6 cents to 84 cents per share, well shy of the Street consensus forecast, and a year-on-year revenue decline of between 1% and 5.5%.
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CEO Chuck Robbins said the group needed to be “practical about the current environment” while “erring on the side of caution in terms of our outlook” as both the war in Ukraine and China’s ongoing Covid lockdown continue to snarl business paths and investments around the world.
“These lockdowns resulted in an even more severe shortage of certain critical components. This in turn prevented us from shipping products to customers at the levels we originally anticipated heading into Q3,”Robbins told investors on a conference call late Wednesday. “Our Q4 guidance incorporates a wider than usual range, taking into account the revenue impact of the war in Ukraine and the continuing uncertainty related to the China COVID lockdowns.”
“When we look at Q4 and you think about the Shanghai lockdown and what we’ve heard because in Shanghai, there are lots of components that go into our power supplies,” he added. “So we’re not able to get those components. Shanghai now is saying they’re going to open up June 1. We don’t know exactly what that means and what that means to win that implies that we would start getting any supply out.”
Cisco shares were marked 13.12% lower in pre-market trading to indicate an opening bell price of $42.50 each, a move that would extend the stock’s year-to-date decline to around 33%.
