Cisco stocks sink on disappointing fiscal Q4 outlook

Shares of Cisco Systems, Inc. plummeted on Wednesday’s after-hours market after the firm issued a worse-than-expected revenue forecast for the current quarter.

The American networking company slashed 12.84% or 6.21 points to $42.15 per share. It trailed a downturn of 4.43% or 2.24 points to $48.36 per share from the earlier session. Consequently, this drop slashed $25.79 billion in the company’s capitalization.

Cisco now expects earnings within the range of $0.76 to $0.84 per share in the fourth quarter. The outlook came in significantly lower than the consensus of $0.92 per share. In addition, the business anticipates Q4 revenue to decline by 1.00% to 5.50%.

For the full fiscal year, it projects EPS to be in the range of $3.29 or $3.37 per share. The forecast is well below the consensus estimate of $3.44. Then, it estimated revenue to grow 2.00% or 3.00% year-over-year. It is well below the earlier guidance of 5.50% to 6.50%.

Cisco is the latest US firm to outline a hit from China’s Zero COVID policy that has worsened the supply-chain crunch. The tightened restrictions in the world’s second-largest economy also hurt demand amid mounting inflation.

Cisco delivers lower quarterly revenue

Moreover, Cisco generated lower-than-expected third-quarter revenue, adding pressure to the stock price. The indicator posted at $12.84 billion, missing the projected $13.34 billion. It is also roughly flat year-over-year in the quarter.

Eventually, its earnings per share was $0.87, slightly above the average estimate of $0.86. The company emphasized that the war between Russia and Ukraine reduced revenue by about $200.00 million. The cut came after it ceased operations in Moscow and Belarus.

Additionally, the geopolitical crisis has added $5.00 million to Cisco’s cost of sales in the quarter. At the same time, it gave another $62.00 million in operating expenses.


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