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Huawei wariness is helping an American networking company

New York (CNN Business)Ciena, a maker of telecom networking equipment and competitor to Huawei, just reported stellar quarterly results. The US crackdown on Huawei could help the company further.

Ciena’s (CIEN) stock soared 25% Thursday after the company posted earnings and sales that topped Wall Street’s forecasts. The company also issued a healthy outlook.
The Trump administration’s ban on US companies from using Huawei gear hasn’t directly led to any new customers for Ciena just yet, CEO Gary Smith told CNN Business. But Smith conceded that many companies have become increasingly wary of Huawei’s growing clout in recent years. That, he said, has helped Ciena more than the recent crackdown on Huawei equipment.
“This dynamic has been in play for awhile. Huawei has such a large market share that we began to see carriers get overly sensitive about their dependency on a single vendor over the past couple of years,” Smith said. “We represent a good alternative on a global basis.”
Smith said Ciena recently landed Deutsche Telekom (DTEGF) as a customer for the first time. Duetsche Telekom still also uses Huawei equipment.
“We had never done business with Deutsche Telekom but they just started working with us,” Smith said, adding that there are a “couple” of other carriers in Europe and Asia that are also looking to work more with Ciena to lessen their reliance on Huawei. He did not name the customers.
Smith said the Huawei ban may not boost Ciena’s presence in the United States that much, because many American telecoms were already not using as much of Huawei’s gear. He also said he wasn’t concerned about any retaliation from China against Ciena, because the company does very little business there.
That means Ciena should be able to continue benefiting from broader tech trends globally, such as the rollout of 5G networks, increased demand for online video and the expansion of cloud computing and data centers.
With these growth drivers in place, Smith said Ciena should hold up well even if the economy slows — as many are predicting.
“While we’re obviously not immune to a global slowdown, carriers’ desire to invest in 5G and the cloud is not really related to GDP,” he said.

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