By
Anders Bylund
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More Articles
February 7, 2008
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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
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Q2 2008
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Q2 2007
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Change
|
|
Sales
|
$9,831
|
$8,439
|
16.5%
|
|
Net Profit
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$2,060
|
$1,921
|
7.2%
|
|
EPS
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$0.33
|
$0.31
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6.5%
|
|
Diluted Shares
|
6,202
|
6,291
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(1.4%)
|
Get back to basics with the income statement.
Margin Checkup
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Q2 2008
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Q2 2007
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Change*
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Gross
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64.5%
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63.9%
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0.6
|
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Operating
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24.5%
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25.2%
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(0.7)
|
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Net
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21.0%
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22.8%
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(1.8)
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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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Q2 2008
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Q2 2007
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Change
|
|
Cash + ST Invest.
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$22,693
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$20,681
|
9.7%
|
|
Accounts Rec.
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$4,165
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$3,267
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27.5%
|
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Inventory
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$1,267
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$1,642
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(22.8%)
|
|
Liabilities
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Q2 2008
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Q2 2007
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Change
|
|
Accounts Payable
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$763
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$931
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(18.0%)
|
|
Long-Term Debt
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$6,851
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$6,416
|
6.8%
|
The balance sheet reflects the company's health.
Cash Flow Highlights
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Q2 2008
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Q2 2007
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Change
|
|
Cash From Ops.
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$2,443
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$2,658
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(8.1%)
|
|
Capital Expenditures
|
$295
|
$334
|
(11.7%)
|
|
Free Cash Flow
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$2,148
|
$2,324
|
(7.6%)
|
|
Owner Earnings
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$2,222
|
$1,929
|
15.2%
|
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
|
|
International Business Machines (NYSE: IBM )
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$141,930
|
14.2
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***
|
|
Cisco
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$141,118
|
17.5
|
****
|
|
Nokia (NYSE: NOK )
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$137,540
|
18.0
|
****
|
|
Motorola (NYSE: MOT )
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$26,320
|
N/A
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**
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Nortel Networks (NYSE: NT )
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$4,910
|
N/A
|
*
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Using the latest reported numbers from Capital IQ.
Keep your partners close and the competition in your vest pocket.
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