Cisco says it’s already dug in for trade war • The Register

Cisco has ready for commerce conflict and thinks it will possibly journey issues out by reconfiguring its provide chain if that turns into crucial.

CFO Scott Herren on Wednesday volunteered data on Cisco’s preparations for the imposition of elevated tariffs by the Trump administration through the firm’s Q2 FY 2025 earnings name.

In our steering, we have now accounted for the added value pushed by the elevated tariffs on China, and proposed tariffs on Mexico and Canada,” he advised traders. “It is a dynamic surroundings, however one we have now spent a major period of time planning for. We’re ready to take actions to mitigate the affect as and when tariffs go into impact.” Herren stated Cisco has already “lowered publicity” in China by 80 % and has “deliberate out a number of eventualities” for different tariff will increase, together with the 25 % impost that Washington imposed on Mexico and Canada earlier than briefly pausing their implementation.

We have now value as a lever, however there’s a variety of issues to undergo earlier than we received there

Cisco has additionally modelled the affect of the tariffs the Trump administration has introduced on metal and aluminium imports.

Herren stated clients aren’t dashing to purchase earlier than tariffs begin, and hinted that if tariffs are launched, Cisco will not rush to drop costs.

“As we take a look at the steps we’d take to mitigate the affect of demand, there are a variety of steps we will take to offset the price,” he stated. “We clearly would have value as a lever, however there’s a variety of issues that we have now to undergo earlier than we received there. Proper now, I do not envision that.”

Wall Road analysts who get to ask questions on earnings calls had been additionally to know if Cisco is nervous by Elon Musk’s Division of Authorities Effectivity.

CEO Chuck Robbins stated Cisco has “clearly been following this very considerably. And I feel it is vital to know that this effort is absolutely about driving effectivity, and productiveness in authorities, which in lots of instances is definitely delivered through using expertise. So we predict that there could possibly be some positives for us.”

He famous that Cisco wins lower than ten % of its income from the US federal authorities, and 75 % of that comes from the Division of Protection which appears largely insulated from DOGE’s cost-cutting.

The networking large is subsequently assured its federal authorities enterprise might be regular.

Robbins thinks different Trump administration insurance policies may benefit Cisco.

“As the USA takes steps to onshore strategic infrastructure, akin to semiconductor fabrication crops, manufacturing, and scaled AI energy sources, we have now the market-leading safe networking portfolio to assist join and defend these capital-intensive investments at scale,” he stated.

Return-to-office mandates may assist, with the CEO predicting they’ll drive demand for Wi-Fi 7 {hardware}.

AI FOMO drives demand

The CEO expects different consumers can even stay energetic.

“I feel one factor our clients perceive is that their have to proceed spending on expertise is simply there,” the CEO stated. “And there is a lot change occurring proper now from a expertise perspective that there is each pleasure concerning the alternative and, candidly, there’s a bit little bit of concern of slowing down an excessive amount of and letting your competitors get an excessive amount of forward of you. So we noticed stable demand.”

Robbins thinks telcos are set to spend up large, as they sweat their package for unusually lengthy intervals however now need to refresh networks to deal with AI workloads.

He additionally admitted mainstream enterprises haven’t acquired Cisco networks to attach their AI infrastructure.

“It is probably not Ethernet below GPUs within the enterprise at present, [it] hasn’t been a significant alternative thus far,” he stated (Nvidia’s networking income is now about $3 billion 1 / 4 and rising).

Cisco expects its AI networking enterprise will decide up as extra clients deploy on-prem AI, and its partnership with Nvidia deepens.

One AI market Cisco thinks is already roaring is Industrial Web-of-Issues merchandise, as orders for ruggedized Catalyst merchandise grew greater than 40 % within the first half of 2025. Robbins reckons that was “an acceleration as clients put together for the deployment of AI-powered robotics and industrial safety.”

Safety can also be hovering, with orders doubling this quarter.

Q2 income landed at $14.0 billion, a 9 % soar in comparison with the identical interval final yr. Internet earnings dipped eight % to $2.4 billion. Buyers had been advised to anticipate income of $13.9 billion to $14.1 billion in Q3, and $56.0 billion to $56.5 billion for the complete yr.

The Q2 outcome was on the excessive finish of steering and the markets rewarded Cisco with a 6.5 % share value bump in after-hours buying and selling.

Possibly they had been additionally impressed by Cisco’s Tuesday announcement of an “AI Renewals Agent” that Cisco thinks can “scale back the time spent constructing a renewal proposal and making ready for a buyer engagement by as a lot as 20 %, a determine poised to develop because the AI agent improves primarily based on utilization and extra workflows are automated.”

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