Financial Analysis of Cisco Systems Essay

3827 Words Jul 10th, 2009 16 Pages
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
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It has built social relationships/partnerships with local organizations around its campuses to ensure business sustainability. Highlighted by a commitment to environmentally conscious operations and products, Cisco strengthens its reputation while empowering its employees.
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Corporate Governance
The Board of Directors is selected through the voting for nominees elected by shareholders. John P. Morgridge was succeeded as the Chairman of the Board by the current CEO John Chambers due to an age policy that was adopted in 2005 restricting Morgridge’s re-election. Morgridge has since been named Chairman Emeritus. 20 percent of the Board of Directors of Cisco also serve on other Boards. Larry R. Carter serves for Qlogic Corporation and Charles H. Giancarlo serves for Netflix Inc. The base salary of the board ranges from 350k-460k per year, but with bonuses and options the compensation can reach up to $4 million.
Reporting Strategy
Cisco‘s pre-2006 reporting strategy was to divide its geographic sections up in four segments: The Americas, Europe, the Middle East, and Africa (“EMEA”); Asia Pacific; and Japan. Since 2006 Cisco as adopted a new strategy dividing markets as follows: United States and Canada, European Markets, Emerging Markets, Asia Pacific, and Japan. Cisco reported record revenue of $9.43 billion

in 2006. Orders are up 20 percent in the European

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