This summary is based on the third quarter fiscal 2007 earnings call conducted by Cisco Systems, Inc. (CSCO) on May 08, 2007.
Key Investors Issues
- EPS were 30 cents a share compared to 22 cents a share last year.
- Net income was $1.9 billion compared to $1.4 billion a year ago.
- Revenue was $8.9 billion compared to $7.32 billion a year ago.
Third Quarter Highlights
Revenue was approximately $8.9 billion, a 27% year-over-year increase which was above guidance of 19% to 20% provided in the second quarter.
Advanced Technologies revenue grew year-over-year by approximately 24%, not including Scientific-Atlanta. The Advanced Technologies revenues are now becoming larger in terms of their total contribution to top-line than Routing.
Cisco standalone revenue was $8.1 billion or 17% growth year-over-year, which was at the high end of standalone guidance of 15% to 17% provided in the second quarter.
Scientific-Atlanta revenue was $752 million or 32% growth year-over-year for the comparable period aligned to conform the Cisco’s fiscal quarter’s. The third quarter fiscal year 2006 reflected only two months of Scientific-Atlanta financial results versus the three months for the third quarter of fiscal 2007. Record revenue for Scientific-Atlanta was driven by several factors including the impact of Regulation 707, a shift in the install base to HD set-top boxes, network upgrades and international expansions.
Routing revenue totaled $1.8 billion up 16% year-over-year due to continued growth in high-end router portfolio, particularly the GSR, the 7600 and the CRS-1.
Switching revenue was $3.1 billion, an increase of 15% year-over-year due to strength across fixed and modular switching portfolio. Advanced Technologies revenue totaled $2.1 billion, including $589 million of Scientific-Atlanta sales representing an increase of 36% year-over-year on a combined basis. Advanced Technologies revenue, not including Scientific-Atlanta, grew 24% year-over-year.
Customer Advocacy Service revenue represents approximately 16% of total revenue.
Other Product revenue totaled $554 million, an increase of 33% year-over-year on a combined basis and an increase of 16% year-over-year not including Scientific-Atlanta.
Total service revenue was $1.04 billion, up approximately 19% year-over-year on a combined basis.
Total non-GAAP gross margin was 64.5% down from 64.8% last quarter.
For product-only, non-GAAP gross margin was 64.7%, down from 64.8% last quarter primarily due to the increased discounts and the as-expected impact of higher Scientific-Atlanta revenue, offset by volume and cost savings.
Non-GAAP service margins, on a combined basis, were 63.2% down from 64.4% last quarter.
It was due primarily to investments in head count and Advanced Services making up a higher proportion of service revenue. Continued growth in Advanced Services has been driven by a momentum this year in service provider and emerging markets as well as in Advanced Technologies.
- Non-GAAP operating expenses, as a percentage of revenue, were approximately 35% in, down from approximately 36% last year.
- Non-GAAP tax provision was 25%.
Non-GAAP net income was $2.1 billion compared to $1.8 billion in the third quarter of fiscal year 2006, representing a 16% increase year-over-year.
Non-GAAP earnings per share on a fully diluted basis were 34 cents, up from 29 cents in the third quarter of fiscal year 2006, representing a 17% increase year-over-year.
