Feeds

BIG trouble in BIG China: Cisco shares fall off a cliff as CEO warns of slump

Networking giant disappoints Wall St, wobbles at sight of Huawei and pals

Top 5 reasons to deploy VMware with Tegile

Cisco's shares slumped ten per cent in after-hours trading on Wednesday after the networking kingpin copped to terrible performance in emerging markets.

The hardware giant squeezed $2.9bn in net income (up 11.6 per cent year on year) out of revenues of $12.1bn (up 1.8 per cent) in the third quarter of 2013. The company beat Wall Street's earnings estimates, but missing an expectation of $12.36bn for revenue.

What walloped the stock price, though, was weak guidance from Cisco chief John Chambers – who warned of a 10 per cent drop in sales in the next three months – on the back of a tough sell environment in its emerging markets.

Cisco's sales to emerging markets shrunk 12 percent from the previous quarter, following on from that period's 3 per cent fall in sales to Asia and a 6 percent slump in China.

Cisco chief John Chambers said on a call discussing the earnings that: "China continued to decline as we and our peers worked through the challenging political dynamic in that country."

Translation: China now has enough 'good enough' technology vendors like Huawei and ZTE that they don't need to buy from us any more.

China was the main anchor dragging down Cisco's emerging markets sales last quarter, so we reckon this is a continuation of that decline. Cisco had tried to prepare for this tough environment in the previous three months by canning 4,000 staff – a decision that may help future earnings, but has not done anything to stem the loss in this crucial market.

Wall Street got a further spook later on in the call when the company revealed that revenues could decline a whopping eight to ten percent in the next quarter as it faced an increasingly "challenging" environment.

"While our revenue growth was below our expectation, our financials are strong, our strategy is strong and our innovation engine is executing extremely well," Cisco chief John Chambers said in a canned statement.

Some of that innovation comes in the form of Insieme, which is Cisco's software-defined networking technology. Unlike most other SDN companies, Cisco is developing a product that closely couples its software to its hardware – a design method that runs contrary to the desires of big kit buyers such as Facebook, which have been compelled to build their "own" open gear in response to Cisco's shoring up of its traditional business. ®

Beginner's guide to SSL certificates

More from The Register

next story
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Lords take revenge on REVENGE PORN publishers
Jilted Johns and Jennies with busy fingers face two years inside
Yes, yes, Steve Jobs. Look what I'VE done for you lately – Tim Cook
New iPhone biz baron points to Apple's (his) greatest successes
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
Edward who? GCHQ boss dodges Snowden topic during last speech
UK spies would rather 'walk' than do 'mass surveillance'
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.