Shares of Cisco fell 13% on Thursday after the company reported mixed earnings results and forecast an unexpected drop in sales this quarter.
Cisco said Wednesday that it expects fourth-quarter revenue to fall 1% to 5.5% from a year earlier, while analysts expected revenue growth of about 6%. Cisco CEO Chuck Robbins said the range of recommendations is wider than usual because of the increasingly complex environment.
The company blamed disappointing prospects for blocking Covid-19 in China, which has exacerbated existing restrictions in the supply chain as well as rising inflation. Scott Heren, Cisco’s chief financial officer, also warned that component shortages would persist in the coming quarters.
Robbins told CNBC on Thursday that it was unclear when supplies would return to normal, even though Shanghai officials have indicated they plan to open on June 1. Robbins expects that after their opening in the ports of Shanghai there will be serious traffic jams, as companies seek to buy up the transport capacity.
“In the short term, we believe that when they start delivering, we’re just one company with one product that we’re trying to get out of there,” Robbins told CNBC in an interview with Squawk on the Street. “But we think it will be a rush to produce. We have seen that their industrial production has dropped significantly and exports have dropped significantly.
“When they open ports, they open the airways, there will be some competition for that,” Robbins continued. “And so we think there will probably be some short-term pressure, and then as soon as they come out to the oceans, we can see another problem in Los Angeles or other ports as we saw where ships are supported by trying to come in. So it was all built into the way we thought about our guide, because we’re just worried that if they open up, it won’t lead to deliveries as quickly as we’d like. ”
Robbins said he believes some of these problems will start to diminish in the company’s first or second quarter.
Cisco reported third-quarter revenue of $ 12.84 billion, roughly the same as last year and lower than Wall Street, which is valued at $ 13.34 billion. Adjusted earnings per share were 87 cents compared to analysts ’forecast of 86 cents a share.
Third-quarter revenue was approximately $ 200 million from the Russia-Ukraine war and added $ 5 million to Cisco sales and $ 62 million in operating expenses for the quarter.
– CNBC Jordan Novet contributed to this article.
WATCH: Cisco Systems beats on revenue but dips on revenue