On Thursday, Cisco shares touched an 18 month low after the company warned of the continuing shortages of components, worrying Wall Street on how exports could suffer due to China's COVID 19 restrictions and the Ukraine crisis.
The company's full-year growth forecast fell to just 13 per cent at US $42.4, and dragged peers Juniper Networks, F 5 Inc and Arista Networks down 1 per cent to 3.1 per cent in early trade.
Since key supply hub China implemented stringent COVID lock downs in April, Cisco, which benefited from the company's efforts to upgrade technology infrastructure to incorporate hybrid work, has faced challenges due to a shortage of components.
The supply is limited, and the entire industry is constrained. Needham analyst Alex Henderson said that the company's scale is different than its competitors, but we point out that peers are not seeing this level of disruption.
There is a record amount of orders that are yet to be delivered to customers, which is a backlog of US $15 billion in products, including US $2 billion in software. The cancellation rates were lower than pre-pandemic times, according to the company.
Analyst Samik Chatterjee said that Cisco's order backlog provides some support and that FY 23 is set up to be more about supply than demand, even though orders will decline on tough comps.
Software business seems to be underperforming while core enterprise commercial of the core hardware business seems to be donating share to competitors, according to Piper Sandler lead analyst James Fish.