Cisco shares fall on poor quarterly results

Poor quarterly results have caused another run on Cisco stock after the company reported falling margins for its core networking product lines and disappointing consumer sales.

Cisco chairman John Chambers reported that gross profit margin fell to 62.4 per cent from 65.6 per cent the year before, leading to fears that Cisco is being forced to discount its prices to maintain market share.

Overall profits fell nearly 18 per cent, although revenues rose six per cent to $10.4bn (£6.4bn).

"As a company, we are going through a period of transition as we move aggressively in the market with our architectural strategy," said Chambers.

"We have managed these market transitions many times, positioning Cisco and our customers for success. Simply put, we are owning our evolution and the next generation of industry leadership."

Cisco predicted that margins will remain at around 63 per cent for the next quarter, and said that the company is looking to repatriate profits from overseas subsidiaries. Sales growth is forecasted at around 10 per cent.

The firm also reported poor figures for its consumer products, and said that sales of the Flip video camera line were below expectations.

Cisco shares fell 10 per cent on the news, and investors are growing increasingly nervous after Cisco's second disappointing quarter. The previous quarterly results wiped over 17 per cent off the company's value.