Cisco Systems Inc. said revenue in its top five emerging markets declined 21 percent led by a 30 percent drop in Russia, a 25 drop in Brazil and an 18 percent drop in both Mexico and China. Cisco warned its revenue would dive as much as 10 percent this quarter, and keep contracting until after the middle of 2014, as a backlash against U.S. government spying contributed to plummeting demand in emerging markets like China.
Chief Financial Officer Frank Calderoni said Cisco was most affected by the political backlash in China but noted that it was difficult to quantify how much of its revenue shortfall was due to politics versus macroeconomic trends. “Between economic and political issues that are occurring in emerging markets we had a significant impact,” Calderoni told Reuters in an interview.
China’s Ministry of Public Security was reported in August to be on the verge of launching a probe into Cisco rivals including IBM Corp, Oracle Corp and EMC Corp over security issues. This reaction comes after former U.S. spy agency contractor Edward Snowden exposed widespread surveillance by the National Security Agency – in particular through Internet data, much of which is transmitted via Cisco‘s network equipment.