Cisco Systems, Inc. (CSCO)
Q4 2011 Earnings Call Transcript
August 10, 2011 4:30 p.m. ET

Executives

Terry Anderson – Vice President, Corporate Communications and Investor Relations
John T. Chambers – Chairman and Chief Executive Officer
Gary B. Moore – Executive Vice President and Chief Operating Officer
Frank A. Calderoni – Executive Vice President and Chief Financial Officer

Analysts

Simona Jankowski – Goldman Sachs
Nikos Theodosopoulos – UBS
John Slack – Citigroup
Tal Liani – Bank of America/Merrill Lynch
Mark Sue – RBC Capital Markets
Brian Modoff – Deutsche Bank
Rod Hall – JPMorgan
Ehud Gelblum – Morgan Stanley
Simon Leopold – Morgan Keegan
Jason Ader – William Blair & Company
Brian Marshall – Gleacher & Company

Presentation

Operator

Welcome to Cisco Systems Fourth Quarter and Fiscal Year 2011 Financial Results Conference Call. At the request of Cisco Systems, today’s conference is being recorded. If you have any objections, you may disconnect. Now I would like to introduce Terry Anderson, Vice President, Corporate Communications and Investor Relations. Thank you. You may begin.

Terry Anderson

Thank you. Good afternoon, everyone and welcome to our 86th quarterly conference call. This is Terry Anderson and I’m joined today by John Chambers, our Chairman and CEO; Gary Moore, Executive Vice President and Chief Operating Officer; and Frank Calderoni, Executive Vice President and Chief Financial Officer.

The Q4 fiscal year 2011 press release is on U.S. high tech market wire and on the Cisco website at www.newsroom.cisco.com. I’d like to remind you that we have a corresponding webcast with slides. In those slides, you will find financial information we cover during this conference call as well as additional financial metrics and analysis that you may find helpful.

Additionally, downloadable Q4 and full fiscal year 2011 financial statements will be available following the call, including revenue by product and geography. Income statements, full GAAP to non-GAAP reconciliation information, balance sheet and cash flow statements can be found on our website in the Investor Relations section. Click on the Financial Reporting section of the website to access the webcast slides and these documents.

A replay of this call will be available via telephone from August 10 through August 17 at 866-357-4205 or 203-369-0122 for international callers. A replay will also be available from August 10 through October 21 on Cisco’s Investor Relations website at www.investor.cisco.com.

Throughout this conference call, we’ll be referencing both GAAP and non-GAAP financial results. Our commentary today will be providing information on both our Q4 and full fiscal 2011 financial results. The financial results in the press release are unaudited.

The matters we’ll be discussing today include forward-looking statements and, as such, are subject to the risks and uncertainties that we will discuss in detail in our documents filed with the SEC, specifically the most recent annual report on Form 10-K, quarterly report on Form 10-Q and any applicable amendments which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements. Unauthorized recording of this conference call is not permitted.

I’ll now turn the call over to John for his commentary on the quarter.

John T. Chambers

Terry, thank you very much. Since the last quarter’s conference call, we’ve made solid progress on our comprehensive action plan to position ourselves for the next stage of growth and profitability, what we will call the next Cisco, which I will review at a high level in just a moment.

In terms of Q4 FY ‘11 overall guidance, we accomplished what we outlined in our Q3 conference call, achieving a little bit more in revenue growth and earnings per share than consensus expectations. Revenue growth for the quarter was approximately 3% year-over-year versus our guidance of zero to two and non-GAAP earnings per share were $0.40, slightly above expectations.

Total non-GAAP gross margins were 62.7% with non-GAAP product gross margins at 61.2% and non-GAAP service margins -- gross margins at 68.6%. Overall book-to-bill was comfortably above one, with total product orders in Q4 growing year-over-year by 11%. We also saw book-to-bill comfortably above one in all of our major product areas.