“Cisco Systems, Inc. (CSCO) reported revenues for the first quarter increased 19% to $10.8 billion with growth experienced in all geographic regions. Earnings increased 8% to $1.9 billion with EPS jumping 14%, aided by the repurchase of 113 million shares during the quarter for $2.5 billion. Investors can expect Cisco to continue to absorb bandwidth through share repurchases throughout fiscal year 2011 given a recent new $10 billion share repurchase authorization. Cash flow from operations increased 10% during the quarter and remained strong at $1.7 billion. With an expected free cash flow yield topping 9%, Cisco is planning to further reward shareholders by paying its first dividend in fiscal 2011, which should yield 1%-2%.
“Cisco continues to manage a strong balance sheet with over $38 billion in cash that can be used to expand the business through acquisitions and innovative investments. For the full fiscal 2011 year, John Chambers, the company’s CEO, believes that the company will grow revenue between 9%-12%. While Cisco management expects short-term challenges over the next several quarters in the public sector and in Europe, they remain very optimistic for the long term given strong growth in emerging markets and new products and innovations in the areas of video collaboration and data center management that are being well-received by customers.”
Ingrid R. Hendershot, CFA, Hendershot Investments, 12/10
