The AAP team at claims that Cisco is facing headwinds

The AAP team at claims that Cisco is facing headwinds ...

The stock of the San Jose, Calif., computer-networking-products company was depreciated due to the appearance of signs of weakness in its most recent earnings report.

According to the AAP team, the company issued disappointing forward guidance after reporting a mixed bag for its April quarter.

Cisco''s revenue was essentially unchanged year over year, indicating that it is underestimating consensus.

While [the company] expects strong demand for its technologies, supply constraints that are expected to continue until its current July quarter are causing a serious shortage of crucial components, according to the AAP team.

The economic slowdown in China was much worse than predicted, according to the report. We continue to see the risks and challenges that follow the reopening as well as with larger China issues -- the increase in manufacturing capacity and port congestion that will stifle supply chains.

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Cisco''s revenue and earnings-per-share predictions for the current quarter have been reduced. We might see the supply chain and margin pressures continue well into Cisco''s October quarter, according to the AAP. We see a tough slog for CSCO shares.

They traded for $43.76, down 10%, but they had slowed by 24% year on year until May 18.

Meanwhile, the ripple effects of Cisco''s guidance will affect a broad spectrum of businesses, including networking organizations such as Ciena (CIEN) - Get Ciena Corporation Report, Juniper Networks (JNPR) - Get Juniper Networks, Inc. Report, Extreme Networks (EXTR) - Get Extreme Networks, Inc. Reportand Nokia (NOK) - Get Nokia Oyj Report

As expectations once more are reduced, there is likely to be more downside for IT firms ahead.

The AAP spokesperson said that adding aggressive interest rates from the Federal Reserve might result in further worries for technology and other growth markets.

The author of this book owns a share in Cisco.

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