Cisco is the newest victim to fall in the spat between the two economic superpowers. The trade war between US and China is taking an ugly turn now, hampering the business prospects of the various multinational organizations.
Cisco Revenue Loss Due to US-China Trade War
In the latest developments on the US-China Trade war issue, there has been a Tit-for-tat scene. After the US banned some Chinese tech firms from doing business, China barred Cisco, an American company from pitching in for business deals.
The USA has banned federal agencies from buying ant surveillance or communication types of equipment from Chinese firms like Huawei.
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In the Retaliation Chinese Government also clocked the Cisco, a renowned US networking company. CEO Chuch Robbins said that now the government deals are not being done with the company. It has resulted in a significant drop in sales.
As per the reports, the business has dropped by 25 percent in the last three months.
The company is not allowed to participate in the bids and not even invited. The fall is steeper and faster than expected.
Cisco has been reporting a growth of around 6% in revenue through years; however, the recent developments in the global economy have hit the company’s progress. The income for the Asia Pacific has gone down from 5 percent to 2 percent. The revenue from China has gone down by a significant 25 percent in just one quarter. China is not a very substantial market for the company and has a share of only 3% of the total revenue. Still, the 25 percent fall in the income is showing a considerable effect on the results.
Though the trade war is not having a massive impact on the business of the company directly. However, the indirect effect is marring its expected growth. There is an environment of economic insurgency, which is making customers apprehensive, and they are not making timely orders.
In recent times company has gotten into software businesses and diversified from hardware and networking types of equipment. However, still, networking equipment is its biggest revenue generators. The US-China trade war getting worse each day can impact Cisco and others as well. There may be fear in investors, which may lead to a decline in the overall business.