Cisco Shares Slip on Profit Forecast Hurt by Component Costs
- Networking gear maker paid more for chips to fill orders
- Company sees supply squeeze persisting until end of 2021
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Cisco Systems Inc. shares fell after the company said its profitability is being squeezed by the cost of securing components needed to meet a surge in orders driven by a rebound in spending on computer networks.
The biggest maker of gear that’s the backbone of the internet gave an optimistic revenue forecast helped by what it called the strongest demand in a decade. But its profit projection was below Wall Street estimates after the company chose to “endure short-term pain” to make sure it has enough chips to meet its order obligations, Chief Executive Officer Chuck Robbins said.