How Heavy Is Huawei Technology Co Ltd (SHE:002502) For Cisco Systems, Inc. (NASDAQ:CSCO)?

Chris Brown - November 26, 2013

Boston, MA 11/26/2013 (wallstreetpr) – Cisco Systems, Inc. (NASDAQ:CSCO) has made it clear that it is facing problems in its networking solutions business internationally and in very much in China. The U.S giant networking company has long relied on China for the bigger revenue from its international trade, but opportunities in this supposedly key market have been shrinking very fast. The company’s Q1.14 was lackluster reported on Nov. 13. Consequently, CSCO made the landmark announced that it expected even more drop in its revenue by as much as 10% in the next quarter due to international pressure. This announced has caused the big loss in share value for the company as investors adjust their position on the ticker, fearing for the worse.

There are a lot of factors that could be in play for the CSCO’s decline in revenue. First, it was obvious that the three week-long U.S. government temporary shut-down dented its business in the U.S leading to poor results. But that impact has no bearing in the future, so its means there are other issues and one of them seems to be Huawei Technology Co Ltd (SHE:002502). You don’t expect Cisco Systems, Inc. (NASDAQ:CSCO) to admit that this Chinese rival is giving it sleepless nights, it is becoming clear that the negative impact that CSCO is experiencing in the emerging markets is due to the penetration of Huawei with cheap equipment.

Huawei is also increasing locking Cisco Systems, Inc. (NASDAQ:CSCO) out of China, just as it has been locked out of the U.S., one of its key markets which contributed about 70% of its global business. Efforts by CSCO to keep Huawei under check flopped following the collapse of the deal between ZTE and CSCO last year.

Cisco Systems, Inc. (NASDAQ:CSCO) remains a formidable force in Europe, Latin America, MEA, it China is not like it anymore. Now that it seems Huawei is proving to be a heavy opponent, CSCO must now rearview it equipment prices especially in the emerging markets if it has to trim the surge of this competitor.

Chris Brown

About Me: I have a Phd in Economics Gender: Male Interests: Playing games like cricket, volleyball Favorite Music: hip hop, rock, jazz

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