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Cisco CEO blames NSA and government shutdown for stock decline

Cisco shares fall when the world's largest computer networking provider said sales will continue to be weak across emerging markets, partially due to disappointment with NSA spying.

By Sonali Basak
Cisco CEO blames NSA and government shutdown for stock decline
Cisco CEO says government uncertainty attributed to poor company performance, as did the world's disappointment with government spying. (File/UPI/Kevin Dietsch) | License Photo

Nov. 14 (UPI) -- Cisco announced sales below expectations Wednesday, and shares declined before market open Thursday. The internet giant warned that annual profit might also decline after government tensions.

Government uncertainty "exasperated the lack of confidence among business leaders," said CEO John Chambers.

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But while government shutdown and economic uncertainty were much to blame for decline in earnings, the U.S. spying scandal also had a role, Chambers said. Sales in emerging markets such as Brazil, India, Russia, Mexico and China declined more than 20 percent.

The National Security Agency's spying, which upset a number of countries, also widely used Cisco's systems to carry out processes. Brazil was one of the countries most upset by the issue, but Chambers said most of the impact of spying was in China.

However, Cisco also faces fierce competition in these markets. Cisco is the world's largest computer networking provider, but companies like Huawei are rising in Asia.

Cisco's revenues grew 2 percent, to $12.09 billion compared with $11.88 billion in the period a year earlier. Analysts surveyed by Bloomberg expected it to grow to $12.3 billion.

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Shares declined 11 percent before market open Thursday, and the company announced it will be cutting 4,000 jobs.

Cisco is a closely watched indicator of the world's economy, as it is widely used by businesses and governments. A number of technology stocks have fallen in conjunction with declining confidence in Cisco.

[MarketWatch] [Bloomberg] [MarketWatch]

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