Summary
Cisco Systems, Inc. (CSCO) reported strong financial results for the third quarter and nine months ended May 1, 2010. Total net sales increased by 27% year-over-year for the quarter and 5.9% for the nine months, driven by broad-based growth across geographic theaters and product categories. Net income saw a significant 62.6% increase in the third quarter, with diluted earnings per share rising by 60.9%, reflecting improved revenue and expense management, as well as a tax benefit. The company's strategic focus on market adjacencies like virtualization, video, and collaboration, coupled with acquisitions such as Tandberg, appears to be paying off. Cisco ended the quarter with a robust cash position of $39.1 billion, demonstrating strong liquidity and financial flexibility. The company continued its aggressive share repurchase program, underscoring its commitment to returning capital to shareholders.
Key Highlights
- 1Total net sales increased by 27% year-over-year to $10.37 billion in Q3 FY10, and by 5.9% for the first nine months to $29.20 billion.
- 2Net income surged by 62.6% to $2.19 billion in Q3 FY10, and by 15.4% for the nine months to $5.83 billion.
- 3Diluted earnings per share grew by 60.9% to $0.37 in Q3 FY10, and by 15.1% for the nine months to $0.99.
- 4Gross margin percentage remained strong at 63.9% for the quarter, with product gross margin improving to 64.3%.
- 5The company completed significant acquisitions, including Tandberg ASA, Starent Networks, Corp., and ScanSafe, Inc., bolstering its portfolio in video communications and mobile infrastructure.
- 6Cash and cash equivalents, along with investments, totaled $39.1 billion, indicating a very strong liquidity position.
- 7Cisco repurchased $2.25 billion of common stock in the third quarter, with $9.3 billion remaining authorization under its ongoing repurchase program.