Financial Analysis of Cisco Systems
Financial Analysis
Of
Cisco Systems
(2005 – 2007)
Document Owner(s)
Elvira Solanes, Keith Allen, Sachin Yadav,Vijay Shankar, Xiaochen Wu
Table of Contents Introduction 3
Company Overview 3
Financial Summary 3
Product Lines 4
Routing 4
Switching 4
Enterprise IP Communications 5
Security 5
Home Networking 5
Optical Networking 5
Storage Area Netwroking 5
Wieless Technology 5
Social Responsibility 5
Corporate Governance 6
Reporting Strategy 6
Organization Structure 6 Operating Environment 7
Risks 8
Legal 8 General management outlook 9 Additional notes 10 Financial performance/ position analysis 11
Quantitative analysis on financial performance 12
P/E (Price Earnings ratio) 12
Profitability 12
Financial strength 13
Management Effectiveness 14 accounting policies/ issues 14
Inventory 14
Revenue Recognition 15
Impairment of Assets 15
Allowance for doubtful Accounts 16
Depreciation 17 Bibliography 17
Introduction
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:
Of
Cisco Systems
(2005 – 2007)
Document Owner(s)
Elvira Solanes, Keith Allen, Sachin Yadav,Vijay Shankar, Xiaochen Wu
Table of Contents Introduction 3
Company Overview 3
Financial Summary 3
Product Lines 4
Routing 4
Switching 4
Enterprise IP Communications 5
Security 5
Home Networking 5
Optical Networking 5
Storage Area Netwroking 5
Wieless Technology 5
Social Responsibility 5
Corporate Governance 6
Reporting Strategy 6
Organization Structure 6 Operating Environment 7
Risks 8
Legal 8 General management outlook 9 Additional notes 10 Financial performance/ position analysis 11
Quantitative analysis on financial performance 12
P/E (Price Earnings ratio) 12
Profitability 12
Financial strength 13
Management Effectiveness 14 accounting policies/ issues 14
Inventory 14
Revenue Recognition 15
Impairment of Assets 15
Allowance for doubtful Accounts 16
Depreciation 17 Bibliography 17
Introduction
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:
Bibliography: Cisco 's Investor Relations section for the Proxy statements. Available at http://www.cisco.com/web/about/ac49/ac20/ac19/ar2006/proxy/index.html SEC website for filed 10-K reports http://www.sec.gov/cgi-bin/browse-edgar?type=10-k&dateb=&owner=include&count=40&action=getcompany&CIK=0000858877 Proxy Statement Form DEF 14A http://www.sec.gov/Archives/edgar/data/858877/000119312506196518/ddef14a.htm Cisco Facts, Available at http://newsroom.cisco.com/dlls/corpinfo/factsheet.html The New York Times, Available at http://marketwatch.nytimes.com/custom/nyt-com/html-companyprofile.asp?symb=CSCO