Financial Analysis of Cisco Systems

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Financial Analysis


Cisco Systems
(2005 – 2007)

Document Owner(s)
Elvira Solanes, Keith Allen, Sachin Yadav,Vijay Shankar, Xiaochen Wu

Table of Contents
Company Overview3
Financial Summary3
Product Lines4
Enterprise IP Communications5
Home Networking5
Optical Networking5
Storage Area Netwroking5
Wieless Technology5
Social Responsibility5
Corporate Governance6
Reporting Strategy6
Organization Structure6
Operating Environment7
General management outlook9
Additional notes10
Financial performance/ position analysis11
Quantitative analysis on financial performance12
P/E (Price Earnings ratio)12
Financial strength13
Management Effectiveness14
accounting policies/ issues14
Revenue Recognition15
Impairment of Assets15
Allowance for doubtful Accounts16

Company Overview
Cisco Systems was incorporated in California in December 1984. The company’s core competency lies in producing networking components and other products in the communications and information technology industries. With 61,535 employees worldwide as of Q3 FY 2007 and offices in 75 countries, Cisco is one of the largest companies in the IT/Networking industry. Cisco was founded by a group of computer scientists from Stanford University. On February 16, 1990, six years after its inception, the company went public at a split-adjusted price of about 6 cents per share. Financial Summary

Today, trading at approximately $32/share, the company has seen an increase in stock price of over 500 times its initial public offering. Total revenues have grown to over $34 Billion (an increase of over 6 billion from 2006) and has enjoyed steady growth since recovering from the dot com collapse.

Figure 1: Cisco’s first ten years Figure 2: Cisco’s last ten years

Product Lines
Cisco primarily produces Internet Protocol (IP)-based networking products for the communications and information technology industries, addressing a wide range of customer needs. Cisco also provides a line of products for transporting data, voice, and video within buildings, across campuses, and around the world. The Company's offerings fall into 8 major categories: Routing

Routers interconnect networks, moving information such as data, voice, and video from one network to another. The Company offers a wide range of routers from core network infrastructure for service providers and large businesses to home network deployments for telecommuters and consumers. Switching

Switching is another integral networking technology that is used in buildings and campuses to build local-area networks, across cities to build metropolitan-area networks, and across great distances to build wide-area networks. The company's switching systems offer many forms of connectivity to end users, workstations, and servers, and function as aggregators on LANs, MANs, and WANs. Enterprise IP Communications

Enable the transmission of voice services over open standards-based Internet Protocol-based networks. Security
A range of network security products and services that offer mission critical protection of information systems from unauthorized use, defense against attack, and minimized damage dut to internet born worms and viruses. Home Networking

Home networking products connect different devices in the household, allowing users to share Internet access, printers, music, movies, and games throughout the home through both wired and wireless connections. Optical Networking

Storage Area Netwroking
Products that deliver standard-based connectivity between servers and storage systems, this may include products such as arrays and tape drives. Wieless Technology
A variety of both in-building and outdoor wireless LAN, as well as wireless bridging...
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