10-QPeriod: Q1 FY2007

CISCO SYSTEMS, INC. Quarterly Report for Q1 Ended Oct 28, 2006

Filed November 21, 2006For Securities:CSCO

Summary

Cisco Systems, Inc. (CSCO) reported strong financial results for the first quarter of fiscal year 2007, ending October 28, 2006. Total net sales grew by a significant 24.9% year-over-year to $8.18 billion, driven by robust product sales growth of 26.4% to $6.94 billion, further bolstered by an 17.5% increase in service revenue to $1.24 billion. This growth was substantially influenced by the recent acquisition of Scientific-Atlanta, which contributed $584 million in net sales. Net income for the quarter rose to $1.61 billion, or $0.26 per diluted share, compared to $1.26 billion, or $0.20 per diluted share, in the prior year's quarter. The company also demonstrated strong operational cash flow generation of $2.27 billion. Cisco continued its commitment to shareholder returns, repurchasing $1.5 billion of its common stock during the quarter, as part of an authorized program totaling $40 billion plus an additional $7 billion authorized in November 2006. The company maintains a healthy balance sheet with $4.31 billion in cash and cash equivalents and substantial investments.

Key Highlights

  • 1Total net sales increased 24.9% year-over-year to $8.18 billion.
  • 2Net income grew to $1.61 billion ($0.26/share diluted) from $1.26 billion ($0.20/share diluted) in the prior year.
  • 3Product sales saw a significant 26.4% increase to $6.94 billion.
  • 4The acquisition of Scientific-Atlanta contributed $584 million in net sales and is expected to enhance video capabilities.
  • 5Operating cash flow was strong at $2.27 billion.
  • 6The company repurchased $1.5 billion of its common stock during the quarter.
  • 7Cash and cash equivalents stood at $4.31 billion, with total investments reaching $15.21 billion.

Frequently Asked Questions

Cisco's total net sales increased by 24.9% to $8.18 billion in the first quarter of fiscal year 2007, compared to $6.55 billion in the same period of fiscal year 2006. This growth was driven by strong performance in both product sales and service revenue.

The acquisition of Scientific-Atlanta, completed in February 2006, contributed $584 million in net sales during the first quarter of fiscal year 2007. This acquisition is expected to enhance Cisco's video capabilities and contribute to the convergence of data, voice, and video technologies.

Cisco is actively returning capital to shareholders through its stock repurchase program. In the first quarter of fiscal year 2007, the company repurchased $1.5 billion of its common stock. As of October 28, 2006, $3.1 billion remained on an authorized repurchase program of $40 billion, and an additional $7 billion was authorized in November 2006.

As of October 28, 2006, Cisco Systems, Inc. maintained a strong liquidity position with $4.31 billion in cash and cash equivalents and $15.21 billion in investments, bringing the total of highly liquid assets to $19.52 billion.