Cisco’s shares have witnessed a 13.7% dip after its executives shared the company’s earnings. The mixed earnings ended up imposing a negative impact on the company’s overall performance. For the running quarter, the Cisco executives even shared a decline in sales that was completely unexpected.
Revenue Expectations
In the projections, Cisco also revealed the revenue expectations fourth quarter. For the respective quarter, Cisco predicted that the year-over-year decline it is expecting to face is between 1% and 5.5%. On the other hand, the analysts were expecting Cisco to perform in a different way. They expected that Cisco would observe a 6% rise in revenue growth for the respective quarter.
Chuck Robbins, the Chief Executive Officer at Cisco made a statement about the company’s guidance range. He stated that a wider than usual guidance range is being expected as the environment is constantly growing more complex.
Disappointing Performance was attributed to China
The company officials blamed it on the COVID-19 situation in China that has resulted in major lockdowns in the tech hub of the country. Due to the lockdowns, the outlook for Cisco is in a dire situation.
The Finance Chief at Cisco, Scott Herren stated that the reason behind a bad outlook is the rising inflation rates. Apart from the inflation rates are the supply chain constraints that have worsened due to the Chinese lockdowns.
Herren also added that in the upcoming quarters, the shortages of the components may become even more terrible.
Things May Become Clearer in June
Robbins has mentioned that there is still too much uncertainty about the supply chains. Currently, there is no knowing when they may get back to their normal and pre-pandemic state. The officials in Shanghai have hinted that they may proceed with the opening of the tech hub and their supply channels in the month of June.
He added that no matter when the ports in Shanghai open up, they will observe overwhelming congestion. Every company is eager to get a hold of the capacity for transportation. As the ports open up in Shanghai, a never-before-seen sight will be witnessed.
Robbins also stated that they have a single product that they get shipped from the particular area. Therefore, their top priority would be to get there as fast as they can and get their shipment out of there. China is currently facing a disastrous situation where its export and production numbers are going down real fast.
Third Quarter Earnings
For the third quarter, Cisco has made a prediction of generating $12.84 billion worth of revenue. The estimation made by the Wall Street analysts for the same quarter is worth $13.34 billion. On the other hand, the earnings the analysts have predicted for the same quarter are 86 cents per share. The earnings that they expect to generate in the same quarter are 87 cents per share.
