Cisco shares drop 13 percent after revenue warning
(Reuters) - Cisco Systems Inc's shares fell as much as 13 percent on Thursday after the network equipment maker forecast a steep drop in revenue for the current quarter, prompting at least 17 brokerages to cut price targets on its stock and two to downgrade their ratings.
Cisco said on Wednesday it expected an 8-10 percent drop in revenue in the current quarter after lower sales to telecom and cable service providers and in emerging markets hurt its results in the quarter ended October 26.
Analysts cut their price targets on Cisco's stock by as much as $6 to a low of $20.
Cisco shares were trading at $21.00 in late morning trading on the Nasdaq. About 140 million shares had traded by 11:13 a.m. ET.
Goldman Sachs was among the brokerages that cut its target price, to $25 from $30.
Goldman also removed the stock from its Conviction List of top picks, citing "reduced confidence in the near-term trajectory", but Goldman analysts maintained their "buy" rating.
Cisco's revenue warning comes after former U.S. spy agency contractor Edward Snowden exposed widespread surveillance by the National Security Agency through internet data, much of which is transmitted via Cisco's equipment.
Cisco's chief financial officer, Frank Calderoni, told analysts the company had been affected by a political backlash in China, but said it was difficult to quantify how much of its revenue shortfall was a result of this.
In a note titled "An outlook to make even mom look twice", RBC Capital Markets analyst Mark Sue said the China issue might linger for a while. Sue cut his price target on the stock to $22 from $24, maintaining a rating of "outperform". Continued...