Networking specialist Cisco reports that it is unable to complete a $14 billion backorder. Previous positive signs of an improvement by 2022 are being thrown in the trash.
In a results call, CEO Chuck Robbins said the situation within the supply chain for Cisco has gotten neither worse nor better. “I wouldn’t dare say our timeline looks good. No idea when things will improve.”
CFO Scott Herren picks up on that by reporting that the problems will not go away in the coming period. “The pressure will ease as supply and demand are balanced. I think that will happen gradually over the next few quarters.”
In an earlier report, Cisco was still optimistic that by 2022 the supply chain would improve to reduce backlogs. That’s where covid variant Omicron put a stop. According to Robbins, many people got sick in factories but also within the supply chain, resulting in many delays.
Cisco is sitting on a $14 billion backlog that it cannot deliver. $2 billion of that is pure software, a critical growth driver in the evolution from hardware to subscription-based cloud services.
In return, there are hefty sums of money to make sure they get the components they need. The result is a 17 percent year-on-year drop in operating cash flow to $2.5 billion.
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