Cisco Systems reported that its revenue rose about 4 percent to $12.96 billion during the third of fiscal 2018-19.
Cisco’s security business revenue increased 21 percent to $707 million. Cisco’s software business revenue rose 9 percent to $1.43 billion.
Revenue in its infrastructure platform business, which includes switches and routers, rose 5 percent to $7.55 billion. That business is expected to get a boost from 5G communication networks, but Cisco executives said they do not expect an impact until 2020.
Cisco will be one of the gainers from the ban of Huawei telecom equipment in the U.S. The Donald Trump administration has blocked Huawei from supplying telecom network to US-based companies and government agencies due to security threats. US has also blocked local component suppliers from selling technology to Huawei.
Cisco said the company forecast fourth-quarter revenue growth of 4.5 percent to 6.5 percent, implying $13.33 billion at the mid-point, and adjusted profit of 80 cents to 82 cents per share.
Net income rose to $3.04 billion, or 69 cents per share, in the third quarter ended April 27 from $2.69 billion, or 56 cents per share, a year earlier.
Meanwhile, the United States raised tariffs on $200 billion worth of Chinese imports to 25 percent last week, prompting China to increase duties on $60 billion of U.S. goods in retaliation on Monday.
Cisco said it has minimal sales exposure to China and changes to its supply chains have helped cushion the blow of U.S.-China trade dispute.
The company said it had been working for six months to change its supply chain and that it expects minimal impact at this point, Reuters reported.
“We still have some manufacturing happening in China. But we’ve greatly, greatly reduced our exposure working with our supply chain and our suppliers,” Chief Financial Officer Kelly Kramer said on a post-earnings conference call.
Only about 3 percent of Cisco’s overall revenues come from China, shielding it from slowing economic growth there that has caused slower sales for tech companies such as Apple. Some Cisco products still face tariffs even after the company moved manufacturing lines for some U.S.-bound products and found alternative sources for some parts.
The company has been betting on its newer business such as cyber security and software as it looks to counter any impact from slowing sales of routers and switches.
