- Cisco has suffered from a $300 million component supply-related loss in its last reported quarter, sending its shares lower by 15%.
- Looking across the industry, Juniper's stock also suffered as it should not be immune to China's lockdowns when it reports second-quarter earnings in July.
- Still, despite supply chain and Russia-related losses, Cisco has managed to deliver better gross margins, resulting in an earnings beat.
- This should continue in the long term due to a higher dose of software in its products and better economies of scale compared to smaller peers as the companies realign their supply chain.
- In the meantime, pains should continue for communications equipment plays as even if China suddenly removes all Covid restriction measures, the congestion in its ports should persist for some time.
For further details see:
Cisco's Long-Term Supply Chain Strength Compared To Juniper