- Cisco Systems reported a slowdown in new product orders, and shares plummeted.
- The computer network equipment maker's current quarter outlook was short of estimates, and it cut its full-year guidance.
- Cisco indicated that customers are currently focused on installing and implementing products purchased in the previous three quarters.
Cisco Systems (CSCO) shares plummeted over 11% in early trading Thursday as the computer network equipment maker’s current quarter guidance missed estimates, and it cut its full-year outlook as customers pulled back on spending.
Cisco said it anticipates second quarter fiscal 2024 revenue in the range of $12.6 billion to $12.8 billion, well short of forecasts. The company also slashed its 2024 estimates of earnings per share (EPS) to $3.87 to $3.93 and revenue to $53.8 billion to $55 billion. It had previously projected EPS of $4.01 to $4.08 and revenue at $57 billion to $58.2 billion.
Cisco said it saw a slowdown of new product orders in the first quarter, adding that it believes “the primary reason is that customers are currently focused on installing and implementing products in their environments following exceptionally strong product delivery over the past three quarters.” The company explained that it anticipates that there are one to two quarters of shipped product orders “still waiting to be implemented by its customers.”
Cisco executives indicated that while macroeconomic challenges remain, supply chain constraints have eased. They noted both shipment lead times and backlog have mostly returned to their normal levels.
In the first quarter, the company reported EPS of $1.11 and sales of $14.67 billion. Both were better than expected.
Shares of Cisco Systems sank to their lowest level since May and put them nearly even for the year.