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Jim Cramer Talks Supply Disruptions With Cisco's CEO

Network equipment maker faces challenges with memory and other inputs.

The semiconductor shortage has drawn a lot attention for its impact on the auto industry. 

But recently, Chuck Robbins, CEO of Cisco Systems  (CSCO) - Get Cisco Systems, Inc. Report, told Jim Cramer there are disruptions in many areas of his company's supply chain. On a recent episode of  "Mad Money", Robbins told Cramer that Cisco is facing constraints in memory, power supplies and labor, just to name a few. He expected many of these issues won't be resolved until mid-2022 at the earliest. (Find out more about Real Money columnists and their investment ideas here.

While these industry-wide shortages have resulted in disruptions in everything from new cars to appliances, Cisco has seen strong numbers through it all. Despite a September slide, shares of Cisco have still risen more than 30% over the past year. The company projected ambitious growth goals for the next four years during their recent investor’s day.

Robbins said Cisco has been transitioning from a hardware company into a software company for the past six years. During the company’s investor’s day they showed shareholders how Cisco was able to deliver on promises it made during this time. There are many technology transitions at play, he said, from 5G wireless, to Wifi 6, to hybrid working, and all of them work in Cisco's favor, he argued.

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While some analysts have called out Cisco for declining gross margins, Robbins said that they will continue to invest for growth and invest where they see the most opportunity. That's why the company's estimates for margins remained in line with its earlier forecasts.

Finally, Robbins noted that hybrid working has been a boon for Cisco, as every corporate meeting room must be ready for video conferencing. The company's Webex meeting platform is just a small part of their overall meeting strategy.

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