Cisco announced two important things in today’s earnings report: The first is that the company is aggressively moving into the Internet of Things—the effort to connect just about every object on earth to the internet—by rolling out new technologies. The second is that Cisco has seen a huge drop-off in demand for its hardware in emerging markets, which the company blames on fears about the NSA using American hardware to spy on the rest of the world.
Cisco chief executive John Chambers said on the company’s earnings call that he believes other American technology companies will be similarly affected. Cisco saw orders in Brazil drop 25% and Russia drop 30%. Both Brazil and Russia have expressed official outrage over NSA spying and have announced plans to curb the NSA’s reach.
Analysts had expected Cisco’s business in emerging markets to increase 6%, but instead it dropped 12%, sending shares of Cisco plunging 10% in after-hours trading.