Summary
Cisco Systems, Inc. reported a 5% increase in net sales for the third quarter of fiscal year 2011 compared to the prior year, reaching $10.87 billion. However, net income saw a significant decrease of 17.6%, falling to $1.81 billion, which translated to a diluted EPS of $0.33, down from $0.37 in the prior year period. This decline was attributed to a 2.6 percentage point decrease in gross margin, largely due to higher sales discounts, unfavorable product pricing, and unfavorable product mix, alongside restructuring charges related to the consumer business. The company announced significant restructuring initiatives in April 2011, including exiting the Flip Video camera product line and a voluntary early retirement program, expecting substantial charges in the fourth quarter. Despite revenue growth in "New Products" and Services, the company experienced a 9% decline in Switches revenue and a 6% drop in public sector sales, signaling ongoing market challenges. The company's balance sheet reflects a strong cash position, with cash and cash equivalents and investments totaling $43.37 billion as of April 30, 2011. Cisco also continued its aggressive share repurchase program, buying back $5.3 billion in common stock in the first nine months of fiscal 2011, and initiated its first quarterly cash dividend of $0.06 per share. Looking ahead, Cisco anticipates a relatively flat revenue for the fourth quarter of fiscal 2011 compared to the prior year, with a continued expectation of lower operating expenses as a percentage of revenue due to restructuring efforts, but acknowledging potential increases in operating expenses as a percentage of revenue due to the slower-than-anticipated cost savings realization.
Financial Highlights
55 data points| Revenue | $10.87B |
| Cost of Revenue | $4.21B |
| Gross Profit | $6.66B |
| Operating Expenses | $4.48B |
| Operating Income | $2.18B |
| Interest Expense | $153.00M |
| Net Income | $1.81B |
| EPS (Basic) | $0.33 |
| EPS (Diluted) | $0.33 |
| Shares Outstanding (Basic) | 5.51B |
| Shares Outstanding (Diluted) | 5.54B |
Key Highlights
- 1Net sales increased 5% year-over-year to $10.87 billion for Q3 FY2011.
- 2Net income decreased 17.6% year-over-year to $1.81 billion.
- 3Diluted EPS decreased to $0.33 from $0.37 in the prior year period.
- 4Gross margin percentage declined by 2.6 percentage points to 61.3%, impacted by discounts, pricing, mix, and restructuring charges.
- 5The company announced significant restructuring initiatives in April 2011, including exiting the consumer business (Flip Video) and a voluntary early retirement program, anticipating substantial charges.
- 6Cash, cash equivalents, and investments remained strong at $43.37 billion.
- 7Cisco initiated its first quarterly cash dividend of $0.06 per share.