Cisco lowers revenue forecast as supply chain shortages hit

Cisco Systems Inc forecast current-quarter revenue below expectations as supply chain shortages and delays drive up costs.

Shares of the network gear maker fell 6.3% in extended trading after it said it expects second-quarter revenue to grow 4.5% to 6.5% year-over-year, compared with Wall Street expectations of about 7.4%.

Cisco also faces higher transport and logistics costs in its supply chain.

Cisco is working to derive more of its sales from software but still gets most of its revenue from hardware. It expects to see the benefit from hardware price increases that came into effect on Sept. 1 later into its fiscal year, because it is still working through hardware backlogs.

The company said orders grew by 33% in the first quarter ended Oct. 30, suggesting strong demand, but supply issues prevented this from translating into revenue right away.

However, the company stood by its fiscal 2022 overall growth target of between 5% and 7%, which was in line with analyst expectations of 6%, according to Refinitiv data.

Cisco expects second-quarter profit per share between 80 cents and 82 cents, with the midpoint narrowly missing Refinitiv IBES estimates of 82 cents.

Revenue for the quarter ended Oct. 30 was $12.90 billion. Analysts on average had expected revenue of $12.98 billion, according to IBES data.