Cisco Systems cut its full-year revenue and profit forecasts on Wednesday in a sign that demand for its networking equipment was slowing, sending the company's shares down nearly 11% after market.
The company has in recent years grappled with supply chain issues and a post-pandemic slowdown in demand, which has hastened its push into software offerings like cybersecurity.
To accelerate its diversification and capitalize on the boom in artificial intelligence, Cisco in September agreed to buy cybersecurity firm Splunk for about $28 billion.
Cisco said it saw "a slowdown of new product orders in the first quarter ... and believes the primary reason is that customers are currently focused on installing and implementing products in their environments".
The company estimates one to two quarters of shipped product orders are still waiting to be implemented by customers. CFO Scott Herren added that the company sees "a return to order growth in the second half of the year".
For the full year, Cisco expects revenue between $53.8 billion and $55.0 billion, and adjusted per-share earnings in the range of $3.87 to $3.93.
The company had previously forecast annual revenue of $57.0 billion to $58.2 billion, and adjusted per-share earnings of $4.01 to $4.08.
Cisco's results were in contrast to rivals Juniper Networks and Arista Networks, both of which posted upbeat results last month on strong enterprise spending.
For the second quarter, Cisco expects revenue between $12.6 billion and $12.8 billion, missing analysts' estimates of $14.19 billion, according to LSEG data.
While the macro challenges still exist, most of the supply chain constraints "are now behind us," company executives said on a post-earnings call, adding that both shipment lead times and backlog have largely returned to normal levels.
Excluding items, Cisco earned $1.11 per share in the first quarter, beating estimates of $1.03. Revenue also topped estimates.
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