Cisco shares slid 12% Thursday morning, a day after the corporate reported its quarterly earnings that beat on the highest and backside traces however gave weaker-than-expected income steerage for the fiscal second quarter. It additionally lowered its full-year income forecast.

The corporate cited a slowdown in orders as prospects deployed Cisco merchandise they’d bought in current quarters.

“The bottleneck that we beforehand noticed within the provide chain has now shifted downstream to implementation by our prospects and companions,” mentioned CEO Chuck Robbins on the earnings name.

Cisco posted adjusted earnings per share of $1.11, beating the $1.03 LSEG (previously Refinitiv) estimate. It reported $ 4.67 billion in income for the quarter versus the $14.61 billion projection. But it surely known as for 82 cents to 84 cents in adjusted earnings per share on $12.6 billion to $12.8 billion within the fiscal second quarter. That means a 6.6% income decline. Analysts polled by LSEG had anticipated 99 cents in adjusted earnings per share on $14.19 billion.

Analysts keyed in on the steerage reduce to income regardless of the earnings beat and the upward revision to its full-year earnings.

“CSCO’s product orders slowed within the quarter on buyer stock digestion with CSCO estimating 1-2 quarters of stock left to be digested by prospects,” mentioned Goldman Sachs analysts in a observe to traders.

Financial institution of America analysts mentioned that “the 20% decline in product orders has pushed a 6% down swing in FY24 income steerage, or a $3.2bn reduce.”

“We do not attribute it to any aggressive elements, somewhat it’s merely a return to the true income atmosphere ex-backlog drawdown help, with extra weak spot associated to orders reverting to the imply, following the 17.4% and 20.3% product income development in 3Q23 and 4Q23, respectively,” they wrote to traders.

CNBC’s Jordan Novet and Michael Bloom contributed to this report.