RESEARCH TRIANGLE PARK – Shares in tech giant Cisco are down 10% Thursday after the company reporting financials that disappointed Wall Street after the markets closed Wednesday.

CEO Chuck Robbins told Wall Street analysts that supply chain issues hit hard.

In his own words:

“While our revenue growth was solid, it was impacted by the supply constraints which are affecting our technology peers, and nearly every other industry. Our product orders were extremely strong and balanced across our markets. But we are constrained in what we can build and ship to our customers. We have a world-class supply-chain team that works to deliver an incredibly high volume of products given our scale and reach. They continue to execute well in this highly fluid and complex environment. We have been taking multiple steps to mitigate the supply shortages and deliver products to our customers, including working closely with our key suppliers and contract manufacturers, paying significantly higher logistics costs to get the components where they are most needed, working on modifying our designs to utilize alternative suppliers where possible, and constantly optimizing our build and delivery plans.

“We are doing this at a breadth and scale that is significantly greater than most in our industry. Of course, all of these steps, while necessary to maximize our production and delivery to customers, add to our cost structure. When combined with cost increases, we are seeing from many of our suppliers, these factors are putting pressure on our gross margins. While we’ve thoughtfully raised prices to offset this impact, the benefits are not immediate and will be recognized over the coming quarters. Our focus remains on our customers to ensure we provide them with the products they need as quickly as possible.”

Responding to a question from an analyst, Robbins talked about customer reaction to product delays:

“Most customers are very understanding. They are super frustrated with the lead times. We have — where we have situations that we need to deal with specific customer issues around budgets, etc., our teams handle that specifically with the customers, but in general, I think that they understand and many of our customers are doing the same thing to their customers. So, this is a whole inflationary trend that we see across the entire economy. I would say that … we did talk about — the first half of last quarter, we did see some deterioration in our supply chain component availability. And then we saw it stabilize in the second half. So that was good. And we’re planning on seeing some slight improvement in Q3 and Q4. We don’t expect a lot of it — we expected to remain stabilized in Q2, and then we think we’ll see some slight improvement in the second half of our fiscal year. That’s our current belief based on what we know today.”

Read the full transcrpit online.

Cisco (Nasdaq: CSCO) employs thousands of people at its campus in RTP.