Summary
Cisco Systems, Inc. reported strong financial results for the second quarter and first six months of fiscal year 2013, driven by broad-based sales growth across its product and service offerings, as well as strategic acquisitions. Net sales increased by 5% year-over-year for both the three and six-month periods, supported by a 3-4% rise in product sales and a robust 10-11% increase in service revenue. The acquisition of NDS significantly contributed to the growth in the Service Provider Video segment. While operating income as a percentage of revenue saw a slight dip in the quarter due to lower gross margins, it improved year-over-year for the six-month period, reflecting effective expense management and lower restructuring charges. A significant factor influencing net income was a substantial tax benefit recognized in the second quarter, primarily stemming from the settlement of a tax audit with the IRS and the reinstatement of the U.S. federal R&D tax credit. Geographically, the Americas and APJC segments showed positive sales growth, while the EMEA segment experienced a decline, attributed to ongoing weakness in the European economy. The company continues to focus on its five foundational priorities, investing in innovation and strategic acquisitions to drive long-term profitable growth, despite facing global macroeconomic challenges and cautious IT spending. Cisco's strong liquidity position, supported by substantial cash and investments, provides flexibility for future strategic initiatives.
Financial Highlights
55 data points| Revenue | $12.10B |
| Cost of Revenue | $4.75B |
| Gross Profit | $7.34B |
| Operating Expenses | $4.55B |
| Operating Income | $2.79B |
| Interest Expense | $147.00M |
| Net Income | $3.14B |
| EPS (Basic) | $0.59 |
| EPS (Diluted) | $0.59 |
| Shares Outstanding (Basic) | 5.32B |
| Shares Outstanding (Diluted) | 5.36B |
Key Highlights
- 1Net sales increased by 5% year-over-year for both the three and six-month periods, reaching $12.1 billion and $24.0 billion respectively.
- 2Product sales grew 3-4% and service revenue increased 10-11% year-over-year, showcasing broad-based demand.
- 3Net income saw a significant boost of 44% in the quarter and 32% over six months, largely due to a $926 million tax benefit from an IRS settlement and R&D tax credit reinstatement.
- 4Operating income as a percentage of revenue decreased slightly to 23.1% in the quarter but improved to 22.7% over six months, indicating effective expense management.
- 5The acquisition of NDS positively impacted the Service Provider Video segment, contributing to its significant sales increase.
- 6Geographic performance varied, with strong growth in the Americas and APJC, but a decline in EMEA due to economic weakness.
- 7The company repurchased $753 million of common stock under its repurchase program during the first six months of the fiscal year.