Cisco’s orders hit by sluggish demand, shares fall

CISCO Systems said on Wednesday (May 17) a large backlog of products due to supply chain constraints has hit demand for new orders from customers, sending the company’s shares down 4 per cent in extended trading.

Cisco’s product orders fell 23 per cent in the third quarter, even as the maker of routers, security services and software products reported a quarterly profit that beat estimates, helped by its aggressive steps to resolve supply chain bottlenecks.

But the backlog, combined with “macroeconomic conditions”, hit demand for new products, company executives said on a post-earnings conference call.

“Increase in product shipments is often leading customers and partners to absorb these shipments prior to placing new orders,” Cisco CEO Chuck Robbins said.

The company forecast modest revenue growth in 2024 and expects to end the fiscal year with roughly double of its normal product backlog.

Cisco also forecast full-year revenue to rise between 10.0 per cent and 10.5 per cent and now expects annual adjusted earnings per share between US$3.80 and US$3.82.

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The company’s third-quarter adjusted earnings per share of US$1 and revenue of US$14.57 billion were both above market estimates pooled by Refinitiv.

Cisco’s shares were down 4.3 per cent at US$45.58 in extended trading. REUTERS