Earnings: Cisco stock falls on sales forecast miss

Yahoo Finance’s Julie Hyman and Brian Sozzi discuss Cisco falling short in sales due to supply chain issues.

Video Transcript

JULIE HYMAN: And let's talk about the other big tech company that we are watching on the flip side, and that of course, is Cisco. Those shares are down 8%. You can see their earnings per share beat estimates. Revenue, you could call it in line to slightly light. It really does seem to be also the guidance that is putting pressure on the company.

For the full year, it's looking at 5% to 7% revenue growth. It is looking at as much as $3.45 in profit for the full year. So that is below what some analysts had been looking for here.

And, you know, it's just-- I guess here, there is a supply issue, Soz. And there's also sort of where we are in this economy and this technological cycle versus what Cisco is doing.

BRIAN SOZZI: Yeah, and when I talked to Cisco's chairman, CEO Chuck Robbins, a couple of months ago, they held a big investor day here. There was some disappointment coming off that investor day. The stock came under pressure. He was making the case to the Street that we want-- they want to be thought of as differently, more of a software play, command a price-to-earnings multiple perhaps more on par with a Salesforce or Microsoft.

But the general mood today, at least looking at the notes that I have seen, is just continued frustration with Cisco. A lot of analysts, they note the supply challenges the company is having. They just would have liked to have seen better quarter-- better guidance. That guidance is a big disappointment here.

But if you are a bull on Cisco, you did get a couple data points. You had product order growth up 33%. Annual recurring revenue up 10% here as the company pivots to more subscription type of products. But by and large, I mean, the Street is voicing its frustration with another disappointing guidance outlook from this company.

JULIE HYMAN: Yeah, voicing and showing, in terms of selling the shares. And one more thing I wanted to mention is price increases because that's something that Chuck Robbins talked about on the call, that they have been, what he said, quote unquote, "thoughtfully" raising prices in order to address their input costs going up. But he said the effect of that-- the benefit from that-- is a little bit delayed. So that might be something that potentially helps the company down the line as well. We shall see.