UPDATE 2-Cisco shares plunge after China lockdowns, Ukraine crisis hits outlook

Reuters
·1 min read

(Adds third quarter profit, fourth-quarter outlook)

May 18 (Reuters) - Cisco Systems Inc cut its full-year earnings forecast on Wednesday after COVID lockdowns in China and the war in Ukraine dragged sales below estimates in the third quarter, sending shares down 13% in extended trading.

Cisco is the latest U.S. company to lay out a hit to earnings from Beijing's "Zero COVID" policy that has worsened supply-chain issues and dampened demand for firms already under pressure from rising inflation.

Executives said ceasing operations in Russia and Belarus due to the ongoing conflict hurt revenue growth.

The company now expects revenue growth of 2% to 3% in fiscal 2022, compared with an earlier forecast of 5.5% to 6.5%.

"We believe that our revenue performance in the upcoming quarters is less dependent on demand and more dependent on the supply availability in this increasingly complex environment," Chief Executive Officer Chuck Robbins said on a post-earnings call.

Its adjusted profit expectations of $3.29 to $3.37 per share were lowered from the $3.41 to $3.46 per share forecast earlier.

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

It expects fourth-quarter revenue to decline by 1% to 5.5%, while adjusted profit expectations of 76 cents to 84 cents per share were much below estimates of 92 cents.

Cisco shares were trading at $40 in extended trading, after closing 4.4% lower on Wednesday. They have lost about 23.7% so far this year.

(Reporting by Yuvraj Malik and Eva Mathews in Bengaluru; Editing by Devika Syamnath)

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