Benzinga | May 20, 2021 11:15AM EDT

Cisco Estimates Supply Chain Crisis to Loom Till 2021 End: FT

* Cisco Systems Inc (NASDAQ: CSCO) expects a gross profit margin hit by 150 basis points in the current quarter from the pandemic fueled supply chain crisis, the Financial Times reports.

* Cisco also issued a cautious quarterly revenue growth guidance between 6%-8% after factoring in the crisis.

* The ongoing semiconductor chip crisis triggered by the pandemic induced higher demand for home electronic gadgets, leading to an acute semiconductor crisis leading to inflated prices and supply chain costs. Higher stockpiling by the manufacturers drove the prices.

* Cisco shares lost 6% in after-market trading following the statement despite the Q3 earnings beat.

* Cisco was paying a premium to ensure chip delivery, other key components, and higher expedite fees to keep production lines running. It expected the conditions to prevail till year-end.

* Cisco took a margin hit at present instead of passing on the higher price burden to the customers. However, it expects to raise the price in the future at a more suitable time.

* Chipmakers Intel Corp (NASDAQ: INTC) and Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSM) estimated the semiconductor chip crisis to linger beyond 2021.

* Price action: CSCO shares traded lower by 0.55% at $52.18 on the last check Thursday.