This summary is based on the fourth quarter fiscal 2008 earnings call conducted by Cisco Systems Inc. (CSCO) on August 5, 2008.
Management:
SVP of Corporate Communications: Blair Christie
Chairman and CEO: John Chambers
CFO: Frank Calderoni
SVP of Corporate Development and Consumer Group: Ned Hooper
SVP and General Manager of Service Provider Group: Pankaj Patel
Key Investors Issues
- EPS were 33 cents a share compared to 31 cents a share last year.
- Net income was $2 billion compared to a profit of $1.9 billion for the year-earlier period.
- Revenue was $10.4 billion, up from $9.4 billion a year ago.
Fourth Quarter Highlights
Total revenue was $10.4 billion, an increase of approximately 10% year-over-year, at the high end of guidance of 9% to 10%.
- Routing revenue was to $2 billion dollars, up 8% year-over-year, due primarily to continued growth in high-end router portfolio at 12% year-over-year, with particular strength in CRS-1 growth of approximately 85% year-over-year.
- Switching revenue was $3.5 billion, an increase of 5% year-over-year, driven by growth in Fixed Switching portfolio.
- Advanced technologies revenue totaled $2.6 billion, representing an increase of 15% year-over-year led by strong performance in unified communications of 29% year-over-year growth and application networking services growth of approximately 30% year-over-year.
- Other product revenue totaled $551 million, an increase of 9% year-over-year.
- Total service revenue was $1.7 billion, up approximately 16% year-over-year with solid growth across all geographies.
Advanced services grew 23%.
- Total revenue growth by geography was in the range of 5% year-over-year in the US and Canada to a high of 42% in emerging markets.
- Emerging markets revenue growth was higher than the order growth rates due to the increase shipment and recognition of previously deferred revenue.
- Total non-GAAP growth margins were 65.2% down quarter-over-quarter and flat on a year-to-year basis.
- For product only, non-GAAP growth margin was 65.3% down 0.6% quarter-over-quarter and up year-over-year.
- On non-GAAP service margin was 64.7% up from 62.7% last quarter.
- Total gross margin by geography range from 62.6% for emerging markets to 70.9% in Japan, across the geographies the margins have remained relatively stable over the last few quarters.
- Non-GAAP operating expenses as a percentage of revenue were approximately 35.7% f, up from 35.5% 2007.
- Foreign exchange impact was $82 million when compared to the same period last year which added approximately 0.8 point to the ratio.
- Excluding foreign exchange, non-GAAP operating expenses grew at 8% year-over-year.
Interest and other income was $157 million versus $228 million for 2007.
- The decline year-over-year was due to market conditions which resulted in lower gains from the sale of public equity investments and lower interest rates.
- Non-GAAP tax provision rate was 25.6%, reflecting realignment of foreign subsidiaries.
- The total of cash, cash equivalents and investments was $26.2 billion, up $1.8 billion from third quarter.
Non-GAAP net income was $2.4 billion compared to $2.3 billion in the fourth quarter of fiscal year 2007, representing a 6% increase on a year-to-year basis.
- Non-GAAP earnings per share on a fully basis were 40 cents, up from 36 cents in the fourth quarter of fiscal year 2007, an 11% increase year-over-year.
- GAAP net income was $2 billion as compared to $1.9 billion in the fourth quarter fiscal year 2007.
- GAAP earnings per share on a fully basis were 33 cents, up from 31 cents in the same quarter of fiscal year 2007.
- The company generated $3.5 billion in cash flow from operations as well as $616 million in proceeds from stock option exercises and employee stock purchases.
- The company repurchased $1.35 billion of common stock or 54 million shares of stock at an average price of $25.11 per share.
- The company ended the quarter with approximately $8.4 billion remaining in the current stock repurchase authorization.
The company ended the quarter at $3.8 billion, down 9% from third quarter.
- Day sales outstanding or DSO was 34 days compared to 39 days in third quarter.
- Total inventory was $1.2 billion, down 3% from third quarter.
- Non-GAAP inventory turns improved from 10.7 last quarter to 11.5 turns this quarter. Inventory purchase commitments were $2.7 billion, relatively flat from the end of third quarter.
