Tech giants feel impact of U.S. spying scandal

|By:, SA News Editor

Cisco's (CSCO) FQ1 results earlier this week highlight how major tech firms are feeling the impact of a backlash in China to Edward Snowden's revelations about U.S. spying.

"All the big U.S. IT companies are concerned," says Jim Lewis, a China and technology expert at the Center for Strategic Studies in Washington.

Cisco has been the most explicit about attributing the Snowden effect to its falling sales in China; Beijing could be specifically targeting the company due to American hostility to telecom-equipment makers Huawei Technologies and ZTE (ZTCOY) over fears that their products could be used for espionage.

However, Juniper's (JNPR) experience is that the "The Snowden effect is not real," adding that business in China continues to grow.

Other companies to suffer in the country recently include IBM (IBM) and Microsoft (MSFT), with the reasons cited including macro-economic factors. IBM might be somewhat inured to the NSA affair, as some of its high-end products face less competition than Cisco's offerings.