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 three mobile application threats

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. ®

3 Big data security analytics techniques

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Record labels sue Pandora over vintage song royalties
Companies want payout on recordings made before 1972
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
Number crunching suggests Yahoo! US is worth less than nothing
China and Japan holdings worth more than entire company
prev story

Whitepapers

SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.