Cisco (CSCO) executives aren’t freaking out over President Trump’s tariffs.
“We’ve been preparing, and the way we look at the China tariffs, we’ve been doing three things,” Cisco CFO Kelly Kramer said on Yahoo Finance’s The First Trade.’ Cisco CEO Chuck Robbins “has been working with the administration to make sure they understand the implications of tariffs. We’ve been working with the government on the pie of our goods that are tariff-able and we’ve been taking actions to make that pie less.”
She also added, “And that’s working with our suppliers, it’s working with our contract manufacturers, and really being agile to move things around – to reduce the size of that pie that is tariff-able.”
Cisco baked the hit its profit would take from increased tariffs into its fourth fiscal quarter. But it also moved a good bit of its supply chain out of China, as many other companies have had to do. Further, Kramer said, Cisco is fresh off a round of price increases related to Trump’s 10% tariffs that went into effect earlier this year.
These moves leave the maker of networking equipment in a prime position to not bear the full brunt of Trump’s trade war.
Investors cheered Cisco ahead of the curve efforts, and latest quarterly results.
The third quarter saw the company’s revenue grow 6% year-over-year. Better results are expected in the fourth quarter, as the company expects growth of 4.5% to 6.5% year-over year.
Shares rose immediately after the opening bell, with the stock up 7% heading towards the closing bell.
Kramer hinted at more price increases, too, if the tariff war heats up further.
“We may have to raise prices to cover the cost increase where we have it,” she said. “But again, when we make the changes and when we can minimize it, we’ll roll back those price increases. But yeah, we have done some incremental price increases to offset those we haven’t mitigated yet.”