Cisco margins hit by component shortfall

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Cisco margins hit by component shortfall

Alex Scroxton

Cisco is still feeling the effects of bottlenecks in the networking component supply chain, despite CFO Frank Calderoni noting a "substantial improvement in our supply" in Q1.

On a year-on-year basis for the quarter just ended, Cisco saw its non-GAAP gross product marging drop by 2.3%, which Calderoni said was "primarily driven by pricing and discounts along with higher manufacturing-related costs associated with the carryover effect of our FY'10 supply chain constraints."

These constraints have improved markedly, said Calderoni, with "customer lead times at normal levels on almost all products".

However he went on to add that even though Cisco's inventory management practices had been improved, overall component supplies were still tight, and would remain so until at least spring 2011.

"We'll have to continue to work through that over the next couple of quarters," he said.


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