CISCO is flourishing in its current CEO regime

What do you expect of an organization which is run by the World’s best CEO and counted as 100 most influential leaders? Yes indeed CISCO System Inc. (CSCO) has been providing quality performance in the Internet world by providing excellent networking products. Company had been established in 1984 by the two lab support staff of the Stanford University, Leonard Bosack and Sandy Lerner. However CISCO has shown a tremendous growth in supervision of its current CEO John Chambers. In his regime, CISCO’s revenues have been pushed from $1.2 billion in 1995 to $48.6 billion in 2013.

Company has Excellency in designing, manufacturing and selling the tools associated with communication and networking which helps in data and voice transfer. CISCO operates in Data Networking Equipment which has total annual revenue generation of $52.6 billion. The industry comprises of switching, routing, LAN, IP telephony and application delivery industry. These segments hold 44%, 26%, 15%, 13% and 2% of total industry. The growth of this industry is derived from certain factors associated with overall Information Technology Industry. The most recent factors which could make difference are Cloud computing, Big Data, Bring your own device and Software Defined Industry.

Cisco’s share in the router industry is 53%, highest in the market whereas it holds 59% of Switches Industry, yet again being the market leader. CISCO’s main competitors are Hewlett-Packard, Juniper and Alcatel Lucent. Cisco has the market capitalization of $114.2 billion which almost twice its competitors market caps. Company generated $48.61 billion revenues which is lower than HP’s revenues but greater than Alcatel and Juniper. However revenue growth for the company has been highest among its peers.

Moving on to the Business segments of the CISCO, there are five major segments in terms of revenue generation, namely, Switches, Services, Routers, Service Provider Video and Collaboration which has percentage share of revenues 30%, 22%, 17%, 10% and 8% respectively. Rest of the four segments is low contributor in terms of revenue earning. Data Center, Wireless, Security and Other segment contributes 4%, 4%, 3% and 2% revenues, respectively.

Cisco’s customers belong to Public sector representing government and educational institutes, Enterprise which has more than 1000 employees, Service providers to such enterprises and Commercial-those who have less than 1000 employees.

Financial Highlights

Cisco has just reported its financial performance for the complete fiscal year of 2013. Company recorded revenue of $48.6 billion with a growth of compound annual rate of 4.22% in last six years. Net Income for FY13 reported to be $9.98 billion with operating margin to be 23%. Cisco stock’s dividend yield for the year is 2.8% and price to earnings multiple for the next year will remain to be 11.5x. Earnings per share have grown at 24% for past twelve months.

Summary

Cisco was founded in 1984 and is being led by the world’s best leader, John Chambers. During his regime company is growing exponentially. Cisco has acting as a nest for the internet world by providing various network and communications tool which help in voice and data transfer. Company has various business segments including Switches, routers, LAN, IP telephony and so on. Most of the revenues are generated from US and the highest revenue contributor from business segment is switches. Hewlett Packard (HPQ), AlcaTel Lucent and Juniper are the major competitors of the company and CISCO holds the largest market share in the industry. Company has posted reputable earnings for fiscal year 2013 with revenues to be nearly $48 billion and stock trades at one year forward PE ratio of 11.5x.