Cisco Faces Logistics Issues; Stock Down Post-Q1 Report

Cisco revenue growth in its fiscal Q1 ended Oct. 30 of 8% year over year to $12.9 billion was “solid” but was hindered by supply constraints, CEO Chuck Robbins told analysts. “Our product orders were extremely strong and balanced across our markets, but we are constrained in what we can build and ship.” The company takes “multiple steps to mitigate the supply shortages and deliver products,” including paying “significantly higher logistics costs,” said Robbins Wednesday. It “thoughtfully raised prices” to offset the impact of higher costs from suppliers that are crimping its gross margins. “Most customers are very understanding. They are super-frustrated with the lead times.” Many Cisco customers “are doing the same thing to their customers, so this is a whole inflationary trend that we see across the entire economy,” said the CEO. When its order backlog might clear is “the $64,000 question,” said Chief Financial Officer Scott Herren. “It's not just one commodity that's constrained,” he said. “Then you have to overlay on that the snarled logistics position that we find ourselves in, really across all lanes, whether it’s ocean or air or trucking.” The company expects revenue growth of 4.5% to 6.5% for this quarter, said the CFO: “The Q2 guide is impacted by the supply chain -- the component supply issues that are putting a headwind on what we can get pushed out the door.” Thursday, the stock closed down 5.5% at $53.63.