Ciso Systems cuts full-year earnings forecast after China, Ukraine lockdowns

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Ciso Systems cuts full-year earnings forecast after China, Ukraine lockdowns

After COVID 19 lockdowns in China and the war in Ukraine, Cisco Systems cut its full-year earnings forecast on Wednesday, dragging sales below estimates in the third quarter, sending shares down 13 per cent in extended trading.

Revenue growth was hurt by the ongoing conflict in Russia and Belarus, according to executives.

Revenue growth is expected to be 2 per cent to 3 per cent in fiscal 2022, compared to the earlier forecast of 5.5 per cent to 6.5 per cent.

Chief Executive Officer Chuck Robbins said that the revenue performance in the upcoming quarters is less dependent on demand and more dependent on supply availability in this increasingly complex environment.

The adjusted profit expectations of US $3.29 to US $3.37 per share were lowered from US $3.41 to US $3.46 per share forecast earlier in the day.

The company reported third-quarter adjusted profit of 87 cents on revenue of US $12.8 billion, compared to expectations of 86 cents on revenue of US $13.87 billion, according to IBES data from Refinitiv.

Revenue is expected to decline by 1 per cent to 5.5 per cent in fourth quarter, while adjusted profit expectations of 76 cents to 84 cents per share were much less than estimates of 92 cents.

After closing 4.4 per cent lower on Wednesday, Cisco shares were trading at US $40 in extended trading. They have lost 23.7 per cent of their value this year.