Cisco executives recently announced declines in product orders in China, and have placed at least part of the blame on the National Security Agency.

"In our Q1 earnings call of November 13th, we stated that product orders in China declined 18% in Q1 FY14, whereas in Q4 FY13, we referenced that our business in China had declined 6%," a Cisco spokesperson told Ars. "By comparison, China bookings were up 8% in Q3 FY13. So, yes, there is a short-term trend of declining business in China, which we have acknowledged."

Cisco noted that overall revenue is growing. "From a topline perspective, total revenues grew 2% $12.1B for the first quarter. Cisco revenues also grew at 6% in the preceding quarter, and grew 5% in the quarter ending April 2013," the company said.

The trend in China is a little worrying, though. When former NSA contractor Edward Snowden revealed documents that showed the NSA had infiltrated the network infrastructure of universities and other institutions in China, suspicion was immediately cast upon Cisco. In an article published on June 20, the Chinese English-language newspaper Global Times stated, "Although the company has issued statements saying that it is not involved in monitoring citizens or government communications in China or anywhere else, recent events mean that it may be quite a long time before we can trust Cisco again."

But Cisco has other issues that are affecting business in China—for one, a long battle in court and intense lobbying efforts against Chinese hardware vendor Huawei. That company has been effectively pushed out of the US market, in part because of political pressure; a House Permanent Select Committee on Intelligence report last October branded Huawei and the cellular equipment manufacturer ZTE as untrustworthy because of their ties to the Chinese military. Now Cisco faces the same sort of political climate in China.

During the conference call, Cisco CEO John Chambers skirted the subject of the NSA, citing economic slowdowns in some countries as a main cause for the steep sales dropoff. That wasn't the case for China, as the country's economy grew eight percent in the third quarter of 2013.

Chambers admitted to as much, saying, "I do think (the NSA revelation) is a factor in China." Robert Lloyd, Cisco's president of sales, said that the NSA leaks have "caused a number of customers to pause and re-evaluate."

Cisco is the main target of Chinese suspicions, but it isn't alone. IBM, EMC, and Oracle became the subject of similar scrutiny in August, when it was reported that the Chinese Ministry of Public Security was "preparing to investigate" the companies over security issues in the wake of revelations about the NSA's PRISM program. Last month, IBM reported a 22 percent drop in revenue in China.

Hewlett-Packard, on the other hand, has actually seen an uptick in network hardware sales in China and has seen less of an overall impact. That fact suggests Cisco's problems are a bit more specific to the company's decade-long problems with China rather than the NSA's activities.

The original version of this story incorrectly stated that Cisco's overall earnings had declined.