China’s Slow Economic Growth Hurts Cisco Sales
The global worries of China's weakening economy is also hurting Cisco. The company lowered its second quarter guidance as due to lower sales in the Asia-Pacific region.
The company reported a first quarter earnings of fifty nine cents per share on sales of $12.7 billion which missed the analysts' expectations of fifty six cents a share on $12.65 billion sales.
The company noted revenue growth of four percent on a year-over-year basis. Chuck Robbins, the CEO of Cisco said during a call with analysts, the company cut its second quarter guidance to zero to two percent growth, with the earnings per share expected somewhere between 53 and 55 cents.
Robbins said, "Yes, the guidance is lower than the market was expecting. I don't take that lightly."
Now China represents four percent of its global business according to the company's CFO Kelly Kramer. The number is an increase from what Cisco had said in September, stating that it represented three percent of its overall sales.
According to Robbins, the drop mainly resulted from adverse exchange rates across the Asia-Pacific region even though Cisco noted a three percent rise in sales in the region during the first quarter. Robbins said, "it's really a mixed story."
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