Shares of Cisco Systems Inc. were getting slammed Thursday after the tech giant warned that its revenue this quarter could fall as much as 10% from a year ago.
Cisco's stock was down 12% in midsession trading after the surprising news. In August, Cisco had forecast revenue growth of 3% to 5% for the current quarter.
In a conference call with analysts, Cisco Chief Executive John Chambers said the partial closure of the federal government had contributed to the company's disappointing sales.
"Our team there did an exceptionally good job managing through this challenging period," Chambers said. "However, the shutdown, debt ceiling negotiations and delay of key decisions exasperated the lack of confidence among business leaders we had highlighted over the past few quarters."
The San Jose company's performance is closely watched because its sales often foreshadow the performance of other technology companies. Cisco sells routers, switches, software and other products to corporate and government customers worldwide.
Cisco's disappointing forecast came the same day that it reported declining earnings for its recently completed fiscal quarter. The company said it earned $2 billion, or 37 cents a share, during the three-month period ended Oct. 26. That's down 5% from $2.1 billion, or 39 cents a share, a year earlier.
Revenue grew 2% to $12.1 billion from $11.9 billion during the quarter.
Analysts expected higher revenue of $12.35 billion, according to a poll by FactSet.
"Our business continues to operate in an inconsistent and mixed environment,” said Frank Calderoni, the company's financial chief.
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