10-QPeriod: Q1 FY2012

CISCO SYSTEMS, INC. Quarterly Report for Q1 Ended Oct 29, 2011

Filed November 22, 2011For Securities:CSCO

Summary

Cisco Systems, Inc. (CSCO) reported its first quarter results for fiscal year 2012, ending October 29, 2011. The company saw a modest 4.7% increase in total net sales to $11.26 billion, driven by a 12.4% rise in service revenue, while product sales grew by 2.9%. Geographically, the Americas and APJC segments showed stronger growth compared to EMEA. The company's gross margin declined by 1.6 percentage points year-over-year to 61.2%, primarily due to higher sales discounts and unfavorable product mix, though this was partially offset by lower manufacturing costs. Restructuring and other charges of $202 million impacted operating expenses. Net income decreased by 7.9% to $1.78 billion, resulting in diluted earnings per share of $0.33, down from $0.34 in the prior year period. Cisco continued its significant share repurchase program, buying back $1.5 billion in stock during the quarter and paid its first cash dividend. The company highlighted ongoing product transitions, strategic focus areas including collaboration and data center virtualization, and cautioned about macroeconomic uncertainties, particularly in Europe and the public sector.

Financial Highlights

53 data points
Beta

Revenue

$11.26B

61.2% Gross Margin

Net Income

$1.78B

15.8% Net Margin

EPS (Diluted)

$0.33

Total Assets

$86.96B

Cash & Equivalents

$4.75B

Free Cash Flow

$2.07B

Financial Statements
Beta
Revenue$11.26B
Cost of Revenue$4.37B
Gross Profit$6.89B
Operating Expenses$4.68B
Operating Income$2.21B
Interest Expense$148.00M
Net Income$1.78B
EPS (Basic)$0.33
EPS (Diluted)$0.33
Shares Outstanding (Basic)5.39B
Shares Outstanding (Diluted)5.41B

Key Highlights

  • 1Total net sales increased by 4.7% to $11.26 billion, driven by strong service revenue growth.
  • 2Product sales saw a more modest increase of 2.9%, with mixed performance across product categories and geographic regions.
  • 3Gross margin declined by 1.6 percentage points to 61.2% due to increased discounts and unfavorable product mix, partially offset by cost savings.
  • 4Restructuring charges of $202 million were recorded in the quarter, impacting operating expenses.
  • 5Net income decreased by 7.9% to $1.78 billion, with diluted EPS falling to $0.33.
  • 6Cisco repurchased $1.5 billion of its common stock and paid its first cash dividend of $0.06 per share.
  • 7The company reported strong growth in Collaboration (up 11.9%) and Data Center (up 107.2%) product sales, while Switching and NGN Routing saw slight declines or were flat.

Frequently Asked Questions

Cisco reported total net sales of $11.26 billion for the first quarter of fiscal year 2012, a 4.7% increase compared to the same period in fiscal year 2011. This growth was driven by a 12.4% increase in service revenue, while product sales increased by 2.9%.

Profitability saw a decrease compared to the prior year. Gross margin declined by 1.6 percentage points to 61.2% due to factors like higher sales discounts and unfavorable product mix. Net income fell by 7.9% to $1.78 billion, and diluted earnings per share decreased to $0.33 from $0.34 in the prior year period. The company also incurred $202 million in restructuring charges.

In terms of product categories, Cisco saw strong growth in Collaboration (up 11.9%) and Data Center (up 107.2%). However, Switching sales were flat, and NGN Routing sales declined by 3.2%. Geographically, the Americas and APJC segments showed solid sales increases, while EMEA experienced more modest growth. Service revenue across all segments contributed positively to the overall sales increase.

Cisco continued its aggressive share repurchase program, buying back $1.5 billion of its common stock during the quarter. Additionally, the company initiated its first cash dividend, paying $0.06 per share.