Shares of Cisco fell 13.7% on Thursday after the company reported mixed results in earnings and forecast an unexpected decline in sales in the current quarter.
Cisco said Wednesday that it expects fourth-quarter revenue to fall 1 percent to 5.5 percent year-on-year, while analysts were looking for revenue growth of about 6 percent. Cisco CEO Chuck Robbins said the scope of the guidelines is wider than usual due to the increasingly complex environment.
The company blamed the disappointing prospect of blocking Covid-19 in China, which exacerbated existing supply chain constraints as well as rising inflation. Scott Heron, Cisco’s chief financial officer, also warned that component shortages would continue in the coming quarters.
Robbins told CNBC on Thursday that it was unclear when supplies would return to normal, although authorities in Shanghai said they planned to open on June 1. Robbins expects serious congestion in Shanghai ports once they reopen as companies race to grab transport capacity.
“In the short term, we believe that when they start delivering, we are just a company with one product that we are trying to get out of there,” Robbins told CNBC in an interview with Squawk on the Street. “But we believe there will be a rush to bring the product out. We have seen that their number of industrial production is declining and their exports are declining.
“When they open ports, they open the airways, there will be some competition for that,” Robbins continued. “So we believe there will probably be some short-term pressure, and once it’s released into the oceans, we can see another problem in LA or other ports, as we’ve seen where ships are backed up trying to get in. It was all in the way we thought about our management, because we’re just worried that if they open, it won’t lead to shipments as quickly as we’d like it to. “
Robbins said he believes some of these problems will begin to subside with the company’s fiscal first or second quarter.
Cisco reported third-quarter revenue of $ 12.84 billion, roughly the same as the year and below Wall Street’s estimated $ 13.34 billion. Adjusted earnings per share were 87 cents, compared to analysts’ forecast of 86 cents per share.
Revenue for the third quarter cut approximately $ 200 million from the Russia-Ukraine war, adding $ 5 million to Cisco’s selling expenses and $ 62 million in operating expenses during the quarter.
– CNBC Jordan Novet contributed to this article.
I WATCH: Cisco Systems is beating revenue, but sinking due to lost revenue