Boston, MA 05/19/2014 (wallstreetpr) – The networking leader Cisco Systems, Inc. (NASDAQ:CSCO) reported its third quarter results ended April 26, 2014, with adjusted (non-GAAP) net income of $2.6 billion on revenue of $11.5 billion.
Operating results
During the third quarter, Cisco Systems, Inc. (NASDAQ:CSCO)’s revenue decreased by ~6% to $11.5 billion due to the lower sales of its products (3Q2014: 12.2 billion). Product sales, which represented 76% to total revenue, were down by 8% to $8.8 billion, partly offset by increased services revenues (+3%). Total revenue for the nine months was $34.8 billion (9M2013: $36.2 million).
Adjusted gross margins remained flat due to lower cost of sales compared to third quarter 2013 despite decrease in product sales. Consequently, it reduced the operating margin to 28.1% with adjusted operating income of $3.2 billion during the period. So, the adjusted net income for 3Q2014 was $2.6 billion with adjusted EPS of $0.51 (3Q2013: $2.7 million or $0.51 per diluted share).
Financial results
Cisco Systems, Inc. (NASDAQ:CSCO) generated cash flows of $3.2 billion from its operating activities during 3Q2014 versus $3.1 billion a year ego. But, the Company used more capital expenditures of $373 million (3Q2013: $291 million). So, free cash flow for the period was $2.8 billion.
For the nine months period, Cisco generated cash flow of $8.7 million from its operating activities and used lower cash of $5.1 billion in investing activities. However, debt repayment of $3.3 billion and ~$8 billion in repurchase of shares compressed the net cash balance. So, the cash balance as of April 26, 2014 was 6.2 billion.
Cisco has a strong liquidity position with total capitalization of $76.6 billion including shareholder’s equity of $55.8 billion and total debt of $20.8 billion as of April 26, 2014. Cisco is financially sound to support the long-term future growth.
Conclusion
Data centers and high-end routing platforms continue to drive growth for the Company. Cisco Systems, Inc. (NASDAQ:CSCO) also expects growth from the U.S. and Europe market with increasing orders from commercial and enterprise segment. However, the macro factors in the emerging markets may create margin pressure due to declining orders. But, growing markets will create demand in the future once recover.
