After the networking company said it generated lower quarterly revenue than analysts predicted and called for an unexpected sales decline in the current period, its shares plunged by as much as 17%.
The company did it.
The company's revenue was roughly flat in the quarter which ended on April 30, according to a statement. An extra week was included in the year-ago quarter. Net income increased by 6 percent. Revenue grew in the previous quarter.
Chuck Robbins said in the statement that China's Covid lockdown and the war between Russia and Ukraine hurt the company's revenue in the quarter. The war reduced revenue by $200 million and added $5 million to the cost of sales for the company.
Robbins said on the conference call that the component shortages worsened after the lock down.
For the fiscal fourth quarter, the company expects adjusted earnings per share to be between 76 cents and 84 cents. Analysts had been looking for earnings of 92 cents per share on $13.87 billion in revenue. Robbins said that the guidance range is larger than usual because of the complex environment.
He said that the revenue performance in the upcoming quarters is less dependent on demand and more dependent on supply.
Other networking vendors fell. After the close of regular trading, Arista Networks, Ciena, and F5 fell.
Scott Herren, the finance chief of the company, said that there are constraints in the fourth quarter on roughly 350 critical components out of a total of 41,000 unique component part numbers.
Robbins said that there are various points of uncertainty in China.
We don't know what that means and when we would start getting any supply, because we don't know exactly what that means.
We believe that there will be lots of competition for ports capacity, airport capacity, and we just believe that there are efforts to get raw materials back into the country.
The impact was not limited to hardware. Software revenue was down 3% year over year. Herren said the growth would have been 5 points higher if it hadn't been for the war in Ukraine and the extra week in the year-ago quarter.
The Secure, Agile Networks segment contributed $5.87 billion in revenue. It is lower than the $6.09 billion consensus among analysts, but it is 4% growth.
The Internet for the Future unit, which contains routed optical networking hardware the company picked up through its acquisition of Acacia Communications, contributed $1.32 billion, up 6% and below the StreetAccount consensus.
The Collaboration segment that includes Webex collaboration software kicked in revenue of $1.13 billion, down 7% and in line with the StreetAccount consensus of $1.13 billion.
Since the start of the year, the S&P 500 has dropped 18%, while the shares of Cisco have risen 23%. It would be the biggest single-day decline since July 1994 if the stock dropped more than 15% on Thursday.
CNBC's Ari Levy contributed to the report.
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