(Bloomberg) -- Cisco Systems Inc. tumbled as much as 19% in late trading after warning of a sales decline in the current quarter and slashing its annual forecast, blaming disruptions stemming from Chinese lockdowns and the Ukraine war.
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Sales will dip 1% to 5.5% in the period ending in July, the company said Wednesday in a statement. Analysts had predicted growth of nearly 6%, according to data compiled by Bloomberg. Cisco's earnings forecast also was short of Wall Street predictions.
Makers of tech equipment have already been struggling with chip shortages, and supply snags triggered by China's Covid-19 lockdowns and the Ukraine conflict have only added to their woes. Cisco, the biggest maker of computer-networking equipment, has struggled to fill all the orders it's been given.
"While Covid lockdowns in China and the war in Ukraine impacted our revenue in the quarter, the fundamental drivers across our business are strong and we remain confident in the long term," Chief Executive Officer Chuck Robbins said in the statement.
Like many tech companies, Cisco began cutting ties with Russia after that country invaded Ukraine earlier this year. The company said Wednesday that stopping doing business in Russia and its ally Belarus had cost it about $200 million in revenue during the fiscal third quarter. Historically the region, including Russia, Belarus and the Ukraine, has accounted for about 1% of total sales.
Cisco shares tumbled as low as $39 in late trading. The stock had fallen 24% to $48.36 this year through the close Wednesday.
Cisco said three months ago that orders grew at more than 30% for a third consecutive quarter. Investors have been focused on whether the company's customers will keep signing up for new gear at that rate or whether concerns about inflation and economic growth will make them more cautious.
Under Robbins, Cisco has been trying to spur growth with updated hardware, as well as new services and software. The hope is to make the longtime king of networking gear less dependent on one-time equipment sales.
The latest outlook marks a setback in that push. Excluding certain items, earnings will be 76 cents to 84 cents a share in the period, Cisco said. That compares with an average estimate of 92 cents.
For the year, revenue will grow 2% to 3%, the company said, compared with a previous prediction of as much as 6.5%.
Revenue in the three months ended in April, was $12.8 billion, little changed from a year ago. Earnings per share, minus certain items, was 87 cents. Analysts had projected a profit of 86 cents on sales of $13.3 billion on average.
(Updates shares starting in first paragraph.)
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