Cisco Systems CSCO -13.73%

nothing if not reliable. Rare disappointments are usually painful.

The tech heavyweight, known for its networking and security hardware and software, said Wednesday that revenue for the third fiscal quarter, which ended April 30, was equal to last year at $ 12.8 billion. It was about 4% below the Wall Street consensus forecast, and this is only the second time in at least five years that the company’s profits have not reached analysts’ forecasts, according to FactSet. And that wasn’t the only bad news: Cisco’s mid-term forecast for the current quarter was expected to be about $ 12.7 billion in revenue, about 8% below the Wall Street target.

The revelations increased Cisco’s share price on Thursday by almost 14%, the worst drop in shares in a single day since February 2011, when another disappointing report fell 14%.

The difference this time is that the shock seems to have nothing to do with demand. The lack of Cisco products actually grew by about $ 1 billion compared to the second quarter, while revenue from products grew by only about $ 95 million during that time. During a call about the company’s earnings on Wednesday, CEO Chuck Robbins blamed disappointing revenues and forecasts for two factors – the cessation of business in Russia after the country’s invasion of Ukraine and the blocking of Covid in China. The latter limited the availability of key components, which were already lacking. Mr Robbins noted that the inability to obtain power alone cost the company about $ 300 million in revenue for the quarter.

There are indications that tough locks in China may ease in regions such as Shanghai, but Cisco is not looking forward to a speedy recovery. The company says it is experiencing restrictions on about 350 components, and Mr Robbins predicted “greater competition for port capacity and airport capacity” once China’s closed regions open. “We just believe that in the 4th quarter it will be impossible for us to catch up with this problem, which led to the instructions for the 4th quarter.”

The results and forecast of Cisco, which have long been considered the operators of demand for corporate technology, paint a more disturbing picture of supply. Shares of other IT equipment companies, such as Hewlett Packard Enterprise, HP and Dell, also fell sharply on Thursday.

The blockade in China began in earnest only in late March, stripping many technology companies whose financial quarters were over. And the effect can spread beyond equipment enterprises that depend on China as a production base.

Bernstein software analyst Mark Mördler wrote on Wednesday that the lack of information technology equipment could affect even the software-focused business, “because cloud companies can’t charge for cloud services until they can provide those services.”

Cisco may not be the only technology giant to fail.

Write Dan Gallagher at dan.gallagher@wsj.com

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