Ciena, a telecommunications networking equipment company that competes with Huawei, has gained some business since the United States banned many of the Chinese company’s products.
But the impact isn’t as pronounced in the United States as you might think. In a conference call with analysts Thursday morning following the company’s latest earnings report, CEO Gary Smith said that more customers outside America are shying away from Huawei.
“A lot of the international carriers are looking to reduce their dependence over time,” he said.
In an interview with CNN Business after the conference call, Smith added that European companies in particular are starting to buy more networking gear and data center equipment from Ciena (CIEN) and less from Huawei.
That boost from European customers helped Ciena report revenue and earnings that topped forecasts. Sales rose 17% from a year ago while profits were up more than 70% from the same period a year ago.
Even so, the stock fell 7% Thursday, giving up earlier gains from premarket trading, after Ciena CFO James Moylan said during the analyst call that “orders moderated somewhat” in the quarter.
Smith added during the call that a slowdown in sales in India was a “part of the reason” that orders took a hit during the quarter.
He clarified his comments during the interview with CNN Business, saying that growth is still expected to be solid overall. It’s simply starting to normalize after several strong quarters.
Despite the pullback Thursday, shares of Ciena are still up more than 20% over the past 12 months, topping gains in the broader market.
Ciena should continue to benefit from sales of their networking equipment to giant telcos Verizon (VZ) and CNN parent company AT&T (T) as each plan more rollouts of 5G wireless networks, Smith said.
He added that he’s not overly concerned about the impact of the US-China trade war on his company, because Ciena should profit from long-term growth trends as video and data usage increases in the US and around the world.
“The trade war is not really a factor. People are still going to watch YouTube,” he said.
