Shares of tech titan Cisco Systems lost more than a tenth of their value in Thursday trading after an appalling earnings report and conference call.Revenue missed expectations and the guidance for the new quarter was devastating.
Cisco delivered earnings per share of 0.53 per share and revenue growth of 2% year over year,CEO John Chambers said on the company's conference call.While not inconsistent with some of our large peers,this was below our expectations for the quarter.The last month of our quarter was during the U.S.Government shutdown.The impact on our federal business was approximately 50 million.Our team there did an exceptionally good job managing through this challenging period.However,the shutdown,debt ceiling negotiations and delayed key decisions exasperated the lack of confidence among business leaders we had highlighted over the past few quarters.
From a macroeconomic perspective,in the last two quarters our order growth rate in emerging countries,which is 20% of our product business,has gone from a positive 13% in total in Q3 to a negative 12% in Q1 of this year.You can do the math,but that's a drag of between 4 to 5 percentage points on our growth for this quarter.
The set-top box orders which are approximately 20% of our total service provider business was also down 20%,Mr.Chambers noted.
CFO Frank Calderoni added that,as a point of reference,approximately 70% of our product revenue is dependent on new orders each quarter.With that in mind,we expect total revenue to decline in the range of 8-10% on a year over year basis.
CNBC analyst Jim Cramer was not amused.Open rebellion has begun,Cramer said.My charitable trust owned this,blew it out,made a huge mistake believing.They should have pre-announced the guidance.This was not the ride othe Valkyries call.This was Tristan and Isolde,which ends badly.
There's a kind of a moment here where I think social media has overrun all bounds.You need seventeen year olds in the board rooms.I'm not being facetious.If you don't know what these people are doing-they understand that social media rules,taht the cell phone rules.The older people don't get it.You get a seventeen year old in PR.You've got to do something.It's a gold rush.You never have to show strong earnings,and you're dominant.They all want to be Amazon;they don't want to be Cisco.
Look,Mr.Chambers has been around a long time.They've got a lot of good employees.I know some of them.But the orders was just staggering.It was staggering.My charitable trust was just slack-jawed,CNBC's popular Jim Cramer complained.
Cisco Systems,Inc.(CSCO)
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