Cisco’s stock fell 10%, its worst day in a year

cisco Shares closed down 9.8% on Thursday, its worst day since May 19, 2022 when the stock slipped 13.7%.

The decline comes a day after the company reported its quarterly earnings, which were better on the top and bottom lines, but gave weaker-than-expected revenue guidance for the fiscal second quarter. It also lowered its full-year revenue forecast.

The company cited a slowdown in orders as customers deployed Cisco products purchased in recent quarters.

“The disruption we saw earlier in the supply chain has now shifted downstream to implementation by our customers and partners,” CEO Chuck Robbins said on the earnings call.

Cisco reported adjusted earnings of $1.11 per share, beating the $1.03 LSEG (formerly Refinitiv) estimate. The quarter reported revenue of $4.67 billion, compared to estimates of $14.61 billion. But it sought 82 cents to 84 cents in adjusted earnings per share on $12.6 billion to $12.8 billion in the fiscal second quarter. This implies a 6.6% revenue decline. Analysts polled by LSEG had expected adjusted earnings per share of 99 cents on $14.19 billion.

Analysts insisted on a cut in revenue guidance despite the decline in earnings and a rise in full-year earnings.

“CSCO’s product orders slowed in the quarter due to customer inventory digestion, with CSCO estimating 1-2 quarters of inventory left to be digested by customers,” Goldman Sachs analysts said in a note to investors.

Bank of America analysts said a “20% decline in product orders led to a 6% decline in fiscal 2024 revenue guidance, or $3.2 billion.”

“We do not attribute this to any competitive factors, rather it is simply the actual revenue environment a return to pre-backlog drawdown support, with additional weakness related to orders returning to the mean following 17.4% and 20.3% product revenue growth . in 3Q23 and 4Q23, respectively,” he wrote to investors.

CNBC’s Jordan Novet and Michael Bloom contributed to this report.