The CEO of Cisco says Trump’s trade war caused “a significant impact on our business in China” (CSCO)

Cisco CEO Chuck Robbins

Cisco CEO Chuck Robbins said the US-China trade war has caused “a significant impact on our business in China”
He said China is not a major part of Cisco’s business but a dramatic change “can still have some impact.”
Cisco shares fell after the company reported a weak outlook.
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Shares of Cisco fell sharply late Wednesday after the tech giant posted as weaker-than-expected forecast, as CEO Chuck Robbins pointed to growing market uncertainty and the impact of the US-China trade war.

“We definitely saw a significant impact on our business in China as it relates to what’s going on with the trade war,” he told analysts during Cisco’s earnings call.

Cisco shares dropped about 8% to $46.60 in late trades, as Wall Street reacted to the company’s disappointing outlook.

Cisco reported a fiscal fourth quarter profit of $2.2 billion, or 51 cents a share, compared with a profit of $3.8 billion, or 81 cents a share, for the year ago quarter. Revenue rose 5% to $13.4 billion. Adjusted income was 83 cents a share.

Analysts were expecting Cisco to report earnings of 82 cents a share on revenue of $13.39 billion. So profit was a slight beat and revenue was in-line.

But the rub came when Cisco said it expects earnings of 80 cents to 82 cents a share for the current quarter. Analysts were expecting earnings of 83 cents a share.

One reason for the lower-the expected forecast is escalating trade tensions between the US and China after the Trump Administration said it would impose more tariffs on Chinese products.

Robbins said Cisco’s business in China is “a small part of our business … but when it falls very dramatically, it can still have some impact,” he said.

Cisco is a leading maker of networking equipment. Robbins said the company continued to see challenges in the service provider market, which is the one area where it has traditionally struggled.

But he also pointed to signs of weak demand in the enterprise tech market, the area where Cisco dominates, which other tech companies, such as NetApp, also cited recently.

“We did see in July an early indication of macro shifts that we didn’t see in the prior quarter,” Robbins said. “We’re monitoring this and watching it.”

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