Cisco and the C-word
The company suffers a huge hit to its stock price after detailing numerous challenges in its first quarter.
As I listened to the earnings call Wednesday, I was struck by how many times executives used the word "challenges." It was like every mention took the stock down a little further in after-hours trading.
Now the transcript is available on Seeking Alpha and I can get an official count. Number of times "challenges" was used: 26.
Government business was called out repeatedly as being down. Orders from the U.S. government dropped 25% year over year, and state government business fell 48% from the previous quarter. Post continues after video:
Momentum was similarly down in the Japanese government business and in orders from some European governments, executives said.
The public sector is a big chunk of Cisco's business -- about 22% of total product orders in the first quarter -- and the company said this area will continue to be "challenging" for several more quarters at least.
Cisco shares were down more than 15% in midday trading, pressuring other tech stocks and weighing on the overall market.
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All hail the bull market, which ended the week with a big rally. But it also is starting to look a little like 1987, which suffered an epic blow-out.
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