Summary
Cisco Systems, Inc. (CSCO) reported its Q3 fiscal year 2009 results, facing a challenging macroeconomic environment characterized by a 17% year-over-year decline in net sales, primarily driven by reduced spending across its service provider, enterprise, and commercial markets. Despite the revenue pressure, the company demonstrated effective cost management, with operating expenses decreasing in absolute terms. Net income saw a decline of 24% in the quarter, and diluted EPS fell by 21% compared to the prior year, reflecting the impact of lower revenues and reduced interest income. However, Cisco maintained a robust financial position, with cash and cash equivalents and investments totaling $33.6 billion. The company continued its share repurchase program, though at a reduced pace compared to the previous year. Strategic initiatives included a focus on collaboration technologies, resource realignment, and targeted investments in the United States and emerging markets, aiming to leverage the network as a platform for future growth and capitalize on market adjacencies. The company also announced two significant acquisitions pending closure: Tidal Software and Pure Digital Technologies.
Financial Highlights
32 data points| Revenue | $8.16B |
| Cost of Revenue | $2.93B |
| Gross Profit | $5.23B |
| Operating Expenses | $3.62B |
| Operating Income | $1.61B |
| Interest Expense | $105.00M |
| Net Income | $1.35B |
| EPS (Basic) | $0.23 |
| EPS (Diluted) | $0.23 |
| Shares Outstanding (Basic) | 5.80B |
| Shares Outstanding (Diluted) | 5.82B |
Key Highlights
- 1Net sales decreased by 17% year-over-year to $8.16 billion, impacted by the global macroeconomic downturn affecting customer spending.
- 2Net income for the quarter was $1.35 billion, a 24% decrease from the prior year's $1.77 billion, with diluted EPS declining 21% to $0.23.
- 3The company maintained a strong liquidity position, with $7.36 billion in cash and cash equivalents and $26.19 billion in investments, totaling $33.55 billion.
- 4Product net sales declined significantly (21.7%), while service net sales showed growth (9.4%), indicating a shift in revenue composition.
- 5Operating expenses were managed effectively, decreasing by 12.7% in absolute dollars due to cost-saving initiatives and lower variable compensation.
- 6Cisco completed $4.0 billion in senior notes issuance in February 2009 to fund general corporate purposes and repaid the $500 million floating-rate notes due in 2009.
- 7The company announced definitive agreements to acquire Tidal Software for approximately $105 million and Pure Digital Technologies for approximately $590 million, pending closure.