Cisco Systems leaves Russia

His name is added to the list of companies that have packed their bags from Russia. The global specialist in computer routers and business software Cisco Systems has announced its intention to officially leave the country, as well as Belarus, in reaction to the invasion of Ukraine on February 24. A symbolic decision which, from a financial point of view, will only have a minor impact. Together, the three countries represent historically around 1% of total company revenue Cisco CFO Scott Herren said in April, adding that the decision to halt all business operations in Russia and Belarus had a negative effect of around $200 million, or 2 percentage points. , in the third trimester. Bad news never comes alone, the group is also hampered in its dynamics by the strict confinements recently imposed by China as part of its zero-Covid policy, and the resulting supply difficulties. ” We had no plan for the shutdown of China “, recognized boss Chuck Robbins during the presentation of the results for the third quarter of 2022, ended April 30. In Shanghai, there are a lot of components that go into our power systems and we are not able to get them “. Of the 41,000 unique components used by Cisco to manufacture its products, 350 were then out of supply. Software sales are also affected by the situation in China.

Downward revision

Not very buoyant, the context prompted the group to revise downwards its forecasts for the entire financial year. Turnover will only increase by 2% to 3%, and not by 5.5% to 6.5% as previously hoped, including a fall of 1% to 5.5% in the fourth quarter after perfect stability in the third. Annual earnings per share are expected to be in the range of $2.75 to $2.85, compared to an estimate of $2.83 to $2.92 so far. Calling the growth ” lukewarm “, the analyst of the American investment bank Morgan Stanley, Meta Marshall, calculates that” over the past ten years, Cisco’s revenue has grown at a compound annual growth rate of 1.1% (excluding acquisitions and spin-offs). Earnings growth has been much healthier over this period, at a CAGR of 6.1%, as the company is a leader in operating expense discipline. »

Beyond these external elements, Cisco says customer demand remains ” solid for subscription offers despite the price increases, even if the American group notes that some of its customers have taken longer than usual on their supply for their next project.

Source link -91