By
Anders Bylund
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More Articles
November 8, 2007
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On Nov. 7, networking giant Cisco Systems (Nasdaq: CSCO ) released first-quarter 2008 earnings for the period ended Oct. 27, 2007.
- You may have noticed that Cisco's stock price dropped more than 6% this morning, erasing approximately over $10 billion of its market cap. Whatever the reason, the company beat sales and earnings estimates. Pro forma EPS was $0.40 vs. the $0.36 target, so these numbers can't be blamed.
- Seen another way, the drop canceled about three months' worth of gains.
- Cisco widened every important margin, and all cash flows were fatter than the GAAP net profit.
- The share count was just about the only thing moving in the wrong direction. Cisco took on a tiny bit more debt, too, but the cash balance increase easily makes up for that.
(Figures in millions, except per-share data)
Income Statement Highlights
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Q1 2008
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Q1 2007
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Change
|
|
Sales
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$9,554
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$8,184
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16.7%
|
|
Net Profit
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$2,205
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$1,608
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37.1%
|
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EPS
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$0.35
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$0.26
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34.6%
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Diluted Shares
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6,330
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6,199
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2.1%
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Get back to basics with the income statement.
Margin Checkup
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Q1 2008
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Q1 2007
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Change*
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Gross
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64.6%
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63.9%
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0.7
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Operating
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24.8%
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24.3%
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0.5
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Net Margin
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23.1%
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19.7%
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3.4
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*Expressed in percentage points.
Margins are the earnings engine.
Balance Sheet Highlights
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Assets
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Q1 2008
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Q1 2007
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Change
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Cash + ST Invest.
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$24,679
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$19,520
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26.4%
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Accounts Rec.
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$3,418
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$3,417
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0%
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Inventory
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$1,315
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$1,477
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(11%)
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Liabilities
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Q1 2008
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Q1 2007
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Change
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|
Accounts Payable
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$820
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$869
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(5.6%)
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Long-Term Debt
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$6,582
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$6,455
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2%
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The balance sheet reflects the company's health.
Cash Flow Highlights
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Q1 2008
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Q1 2007
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Change
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|
Cash From Ops.
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$3,089
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$2,271
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36%
|
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Capital Expenditures
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$296
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$214
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38.3%
|
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Free Cash Flow
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$2,793
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$2,057
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35.8%
|
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Owner Earnings
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$2,330
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$1,742
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33.8%
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Free cash flow is a Fool's best friend.
Competitive Context
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Market Cap
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Trailing P/E Ratio
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CAPS Rating
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Cisco
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$188,630
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26.4
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*****
|
|
Nokia (NYSE: NOK )
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$156,220
|
16.7
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*****
|
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Juniper Networks (Nasdaq: JNPR )
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$16,970
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61.9
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***
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Nortel Networks (NYSE: NT )
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$8,120
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NM
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*
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CIENA (Nasdaq: CIEN )
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$4,000
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64.8
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***
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Using the latest reported numbers from Capital IQ, a division of Standard & Poor's.
Keep your partners close and the competition in your vest pocket.
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