Cisco emerging markets earnings drop significantly following Snowden revelations
November 14, 2013
It was only a matter of time before NSA surveillance revelations began to take down the communications infrastructure business.
On Thursday, Cisco, the multinational computer networking giant headquartered in Silicon Valley, reported an unexpected 10 percent sales drop during the current quarter.
“It’s not the only factor, but Cisco says the backlash over U.S. surveillance has definitely hit orders in China,” writes David Meyer for Gigacom. “Orders in other developing countries have also plummeted, and again the NSA is being cited as a possible factor.”
Damage estimates are significant. On Wednesday, the corporation reported a sudden 21 percent plummet across the board in emerging markets. Its revenue dropped 25 percent in Brazil, 18 percent in India, Mexico and China, and 30 percent in Russia.
In October it was reported that the NSA has a backdoor in some Cisco products. A backdoor is a way to get around normal user authentication and gain covert use of a computer system.
The Dual_EC_DRBG algorithm, a cryptographic random number generator designed for security purposes and promoted by the National Institute of Standards and Technology (NIST), served as a backdoor for the NSA. Its vulnerability was revealed by whistleblower Edward Snowden.
NIST has denied working with the NSA to compromise security. NIST is a non-regulatory agency of the United States Department of Commerce.
Gigacom notes that it was inevitable that the NSA scandal would negatively effect the computer networking business.
“This shouldn’t have come as a surprise,” writes Meyer. “Communications infrastructure is absolutely central to the surveillance scandal, and that’s Cisco’s business. An American networking firm was never going to come out of this mess well – and the whole infrastructure business is in a state of upheaval anyway — but the figures are sobering nonetheless.”
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