http://www.morningstar.com/earnings/16505798-cisco-systems-inc-csco-q4-2010.aspx

Cisco Systems Inc CSCO
Q4 2010 Earnings Call Transcript

Transcript Call Date 08/11/2010

We repurchased $2.3 billion of stock during the quarter or 99 million shares at an average price of $23.33 per share. The remaining authorized repurchase amount under the stock repurchase program was approximately $7 billion at the end of the quarter.

We also delivered on our hiring projections with an incremental increase of approximately 2,000 additions to the Cisco team in Q4 FY '10, not including acquisitions. This follows on our last quarter's new hires, again, not including acquisitions, of over 1,000 people in Q3 fiscal year '10. It is our intent to continue to hire in proportion to our global business assuming support from government decisions on private job creation in the U.S. This quarter we added over 70% of the additions in the U.S. and over 600 of those in California.

In summary, from a financial perspective, we exit Q4 FY '10 in a tremendous position of strength from a financial, execution, innovation and a growth strategy perspective.

The second area I would like to now cover is a higher level of geographic overview, which is the primarily way we run our business and one which we felt would be a key area of interest given some of the uncertainties from a global perspective. The discussion for this section would be on product orders in terms of year-over-year growth. From a global perspective, Q4 product orders grew 23% from a year-over-year perspective.

Now on to the individual geographies. In Q4 FY '10, our four largest theaters had extremely good balanced order growth between 20% and 35% from a year-over-year perspective. Emerging markets led the way with 35% growth year-over-year. Europe was second with very solid growth in the mid 20s year-over-year, while Asia Pacific and the U.S. and Canada theaters came in with growth of approximately 20% year-over-year. Japan, which accounts for only 3.5% of our product orders, were flat in Q4 from a year-over-year perspective.

The key takeaway from a country perspective was once again the balance across our top 15 countries. In Q4, 13 of the top 15 countries orders grew in double digits year-over-year. Two of our top 15 countries, India and Switzerland grew over 50% in Q4 from a year-over-year perspective. Three countries grew in the 40s, including Canada, Brazil and Mexico. Three others, including Australia, France and Russia, grew approximately 30% or better, while China, the U.S., U.K. and the Netherlands grew approximately 20% or better. Italy and Germany grew in high single digits year-over-year.

Now on to the customer segments. Again, in Q4, total product orders grew about 23% year-over-year. The balance across our customer segments from an order perspective was very solid, ranging from growth in the high teens in service providers to high 20s in the commercial marketplace. The public sector and enterprise segments grew approximately 23% to 25% year-over-year, while the consumer was flat year-over-year. Across our four major theaters, balance was fairly similar by customer segment.

Moving on to products, which we traditionally discuss in terms of revenue, our advanced technologies grew in Q4 year-over-year at approximately 27%. Switching also grew at 27%, and routing, after a very strong Q3, grew at 15% year-over-year. Of particular interest within key product families, the CRS product family grew revenue approximately 20% year-over-year and is now at an annualized run rate of approximately $1.2 billion. The ASR family grew 150% year-over-year and it's now an annualized run rate of approximately $1 billion. The Nexus family with an annualized run rate of over $2 billion grew approximately 325% year-over-year. The UCS product family continue with an awesome performance with the number of new customers growing approximately 90% from Q3 to Q4 to now over 1,700 total customers.

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