On Feb. 6, Cisco Systems (Nasdaq: CSCO) released second-quarter earnings for the period ended Jan. 26.
- Companies with quarterly sales that compare favorably to the gross domestic product of Jamaica or Albania have the luxury to plan for the long term. A deal here and a miss there just don't move that weighty financial needle very far.
- That said, management saw fewer incoming orders in January than it would have liked, which will hamstring the next quarter's shipped-and-paid sales a bit. Expectations are for 10% revenue growth from the last Q3, rather than the steady 16% results we've seen lately.
- Cisco's margins shrank a bit this time, both from last year and sequentially. It looks like the culprits are increased R&D spending, which is OK by this Fool, and higher administrative expenses, which isn't quite as cool.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q2 2008 |
Q2 2007 |
Change | |
|---|---|---|---|
|
Sales |
$9,831 |
$8,439 |
16.5% |
|
Net Profit |
$2,060 |
$1,921 |
7.2% |
|
EPS |
$0.33 |
$0.31 |
6.5% |
|
Diluted Shares |
6,202 |
6,291 |
(1.4%) |
Get back to basics with the income statement.
Margin Checkup
|
Q2 2008 |
Q2 2007 |
Change* | |
|---|---|---|---|
|
Gross Margin |
64.5% |
63.9% |
0.6 |
|
Operating Margin |
24.5% |
25.2% |
(0.7) |
|
Net Margin |
21.0% |
22.8% |
(1.8) |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q2 2008 |
Q2 2007 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$22,693 |
$20,681 |
9.7% |
|
Accounts Rec. |
$4,165 |
$3,267 |
27.5% |
|
Inventory |
$1,267 |
$1,642 |
(22.8%) |
|
Liabilities |
Q2 2008 |
Q2 2007 |
Change |
|---|---|---|---|
|
Accounts Payable |
$763 |
$931 |
(18.0%) |
|
Long-Term Debt |
$6,851 |
$6,416 |
6.8% |
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q2 2008 |
Q2 2007 |
Change | |
|---|---|---|---|
|
Cash From Ops. |
$2,443 |
$2,658 |
(8.1%) |
|
Capital Expenditures |
$295 |
$334 |
(11.7%) |
|
Free Cash Flow |
$2,148 |
$2,324 |
(7.6%) |
|
$2,222 |
$1,929 |
15.2% |
Free cash flow is a Fool's best friend.
Competitive Context
|
Market Cap |
Trailing P/E Ratio |
CAPS Rating | |
|---|---|---|---|
|
International Business Machines (NYSE: IBM) |
$141,930 |
14.2 | |
|
Cisco |
$141,118 |
17.5 | |
|
Nokia (NYSE: NOK) |
$137,540 |
18.0 | |
|
Motorola (NYSE: MOT) |
$26,320 |
N/A | |
|
Nortel Networks (NYSE: NT) |
$4,910 |
N/A |
Using the latest reported numbers from Capital IQ.
Keep your partners close and the competition in your vest pocket.
Related Foolishness:
