After its quarterly earnings call on Wednesday evening, Cisco’s stock price is down over 12 percent(as of this writing) on Thursday. The tumble comes after Cisco adjusted its guidance down, saying that its current quarter’s revenue could be down as much as 10 percent when compared to the same period last year.
In the first fiscal quarter of 2014, the company took in a net profit of $2 billion, down 4.6 percent when compared to the same period in 2013.
Interestingly, company executives attributed part of that slowdown to a backlash from China. Cisco says that June 2013 documents provided by former National Security Agency contractor Edward Snowden revealed American surveillance in China and that those revelations have somewhat tarnished its business with the nation.
According to a Seeking Alpha transcript of the earnings call with industry analysts, Cisco CEO John Chambers said the NSA’s surveillance had “an impact in China.”
“I do think we are seeing a slowdown in these emerging markets both in the decision making and their economies. And so I do not think it is a major factor across all of emerging [markets]. I do think it is a factor, however, in China.”
Rob Lloyd, Cisco’s president for development and sales, chimed in: “This issue has caused, increasingly, customers to pause and [is] another issue for them to evaluate, in all of those complexities that you've already discussed. So it's not having material impact, but it's certainly causing people to stop and then rethink decisions, and that is, I think, reflected in our results.”
Reuters noted that IBM’s revenue in China has recently been suffering as well and led the company to a four-percent drop in its third-quarter profit.
"We hope and demand that relevant foreign companies respect China's laws," Chinese Foreign Ministry spokesman Qin Gang told the news agency on Thursday. "At the same time, as the Chinese government, we of course have an obligation, a responsibility, to protect the country's security."
Source : Ars Technica
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