Cisco Systems Inc (CSCO) Common Stock USD0.001
HL comment (12 February 2015)
Cash flows from operations were $2.9 billion for the second quarter of fiscal 2015, compared with $2.5 billion for the first quarter of fiscal 2015. The group returned $2.2 billion to shareholders during the period. The company highlighted that its fourth annual Cisco Global Cloud survey (2013-2018) projected that over the next five years data centre traffic will nearly triple, with cloud representing 76% of total data centre traffic.
The CEO went on to note that "Our strong momentum is the direct result of how well we have managed our company transformation over the last three plus years and our leadership position in the key technology transitions of cloud, mobility, big data, security, collaboration, and the Internet of Everything. Every nation, every company, everything is becoming digitized and the network is at the centre of this transformation." For now, analyst consensus opinion currently points towards a buy.
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- Total revenue rose by 7% year-over-year to $11.94 billion.
- Adjusted Earnings Per Share (EPS) increased to 53 cents (Q2 2014: 47 cents).
- The board declared a quarterly dividend of $0.21 per common share, a two-cent increase over the previous quarter's dividend.
- Full year 2014 revenues declined by 3% to $47.1 billion year-over-year. EPS over the full year declined by 19.9% compared to 2013.
- The company has seen several quarters of weak sales in China, Brazil, Mexico, India and Russia. The CEO previously noted that "companies there have become more hesitant to buy Cisco products due to recent revelations about internet surveillance by the US National Security Agency."
- Technological changes could adversely impact on Cisco's dominant high profit switching and routing business segments.
- Cisco is exposed to competition from rivals such as Hewlett-Packard, IBM, Juniper Networks and Huawei, a Chinese technology giant that recently announced a push to sell more networking gear to US businesses.
- The results materialised at the upper end of analyst forecasts.
- The CEO noted that "we saw the best balance of growth across all our geographies, products, and segments."
- The company continues to pursue an acquisition-led growth strategy, diversifying its business and entering consumer markets. During the period, Cisco acquired Neohapsis to help deliver services to assist customers in building security capabilities required to remain secure and competitive in today's markets.
- Cost reductions remain a management focus.
- Cisco has long been seen as a sector bellwether for corporate technology spending. The Silicon Valley giant is known for its dominant position in the market for information-technology networking gear.
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