Woo Jin Ho 3.6 5 ideas

Cisco shares tumbled due to margin pressure from high DRAM (memory) pricing. The analyst notes, "The margin pressure from the DRAM pricing was a lot greater than I had anticipated." This is not an isolated incident but the "first shoe to drop." Dell is "highly exposed to DRAM exposure," and HP/NetApp face similar input cost headwinds. They are likely to cut estimates below consensus in upcoming earnings. AVOID hardware manufacturers exposed to memory component inflation until earnings reset. Companies manage to pass on costs faster than expected.

Cisco shares dropped ~7-9% on a profit forecast miss caused by high component costs (memory). While Cisco is trying to pass costs to customers, there is a lag. They are squeezed between rising input costs and the need to compete for AI networking share against agile competitors like Arista. AVOID until margins stabilize. Nancy Tengler (also in transcript) is buying the dip for the long term, citing strong earnings outside the margin issue.