Cisco (CSCO) Plunges 10% Amid Memory Shortage Pressures Despite Topline Earnings

Cisco Systems (CSCO) fell over 10% in extended trading after reporting fiscal second-quarter revenue and EPS that beat estimates, but gross margins contracted to 67.5% from 68.7% year-over-year as a global memory shortage drove up component costs. The company warned margins could slide to 65.5%–66.5% in the current quarter. CEO Chuck Robbins said the company is raising prices and renegotiating contracts with partners, and its scale should help it manage the industry-wide dynamic better than peers. The decline dragged CSCO into negative territory for the year, while shares have gained nearly 20% over the past 12 months.