CISCO SYSTEMS INC.

I.

Introduction Cisco Systems Inc. is on the frontiers of the networking and communications industry since its incorporation on December 1984. Cisco designs, manufactures, and sells Internet Protocol (IP)-based networking and provides the services related to their use. Cisco's products are classified into four categories: core technology, routing and switching, new products, and other products. The company's products and services are globally known to improve productivity, to reduce costs, and to sustain a long-term competitive edge. Cisco's customers practically include public and private businesses, service providers, commercial enterprises, and consumers.

II.

Business Prospects Aside from developing and manufacturing technologies and products internally, Cisco acquires, invests, and forms alliances with companies that deliver services complementary to Cisco's existing products and services offering. Cisco announced its intent to acquire Truviso Inc. 1 on May 3, 2012. Truviso provides accessible, real-time network data analysis and reporting software. This will enable Cisco to provide instant access and visibility over networks to increase operational efficiency and boost revenue. On March 15, 2012, Cisco expressed its intent to acquire NDS Group Ltd.2, a leading provider of video software and content security solutions that enable users to access digital content on the go. This acquisition will streamline Cisco's Videoscape platform and expand company opportunities in China and India. Cisco will collaborate with NBC Olympics3, a division of the NBC Sports Group, in covering 17 consecutive days of the London Olympic Games from July 27 to August 12, 2012. This is the third team up of Cisco and NBC Olympics for the said event. On May 1, 2012, Cisco acquired privately held ClearAccess4, a supplier of TR069-based software to service providers for the provisioning and administration of residential and mobile devices. On March 19, 2012, Cisco announced the acquisition of privately held Lightwire Inc.5, a developer of advanced interconnect technology for high-speed networking applications.

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http://newsroom.cisco.com/press-release-content?type=webcontent&articleId=838210 http://newsroom.cisco.com/press-release-content?type=webcontent&articleId=712002 3 http://newsroom.cisco.com/uk/press-release-content?articleId=798032&type=webcontent 4 http://newsroom.cisco.com/press-release-content?type=webcontent&articleId=834638 5 http://newsroom.cisco.com/press-release-content?type=webcontent&articleId=744182

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III.

Stock Valuation Metrics Cisco Systems Inc. common stock is traded on the NASDAQ Global Select Market under the symbol CSCO. Cisco is a highly diversified company with six acquisitions6 in 2011 and two acquisitions in the past two quarters of 2012. It is a big technology stock that is well-positioned in the global market and responds strategically to market challenges. Common stock is valued at 5.36 billion as of June 19, 2012.7 As of June 19, 2012, Ciscos price to earnings ratio8 is 12.69 which is lower than industry average of 15.49. This can be attributed to Ciscos efforts to capitalize on new acquisitions, initiatives and infrastructure on the past year. This short-term decline due to capital expenditure is expected to benefit the company in the long-term. Cisco reported an increase in earnings by 8% which will continue to rise with the companys cost reduction effort expected to save $1 billion in fiscal operating expenses annually. Meanwhile, the stock price peaked in April and declined in May. The decline can be attributed to the acquisitions completed on the same month. In June, Ciscos stock price is traded at a consistently higher price than in May. Ciscos stock beta is 1.23 compared to industry average of 1.13. Ciscos stock is relatively fluctuating but it yields consistent and high returns. The price to sales ratio is 2.02 higher than the industry average of 1.38; price to book ratio is 1.80 which is higher than the industry average of 1.17. Cisco paid dividends twice in January and April this year as part of the quarterly cash dividend initiative. Return on investment is high at 10.27 compared to industry average of 5.26 which return on equity is 19.41 compared to 5.55 industry average.9

IV.

Financial Ratios Ciscos quick ratio is 3.49 compared to industry average of 1.83; current ratio is 3.57 compared to industry average of 2.15; and debt to equity ratio is 31.87 compared to 30.88 industry average. The company has a great asset group due to acquisitions which makes it highly liquid and solvent. It also has long-term debt used to finance steady growth of the company. Gross margin during the last twelve months is 61.42 compared to 31.71 industry average; operating margin is 20.06 compared to 4.53 industry average; and lastly, net profit margin is 16.14 compared to 2.70 industry average. 10

http://www.cisco.com/web/about/doing_business/corporate_development/acquisitions/ac_year/about_cisc o_acquisition_years_list.html 7 http://www.finviz.com/quote.ashx?t=csco 8 http://www.reuters.com/finance/stocks/financialHighlights?symbol=CSCO.O 9 http://www.reuters.com/finance/stocks/financialHighlights?symbol=CSCO.O 10 http://www.reuters.com/finance/stocks/financialHighlights?symbol=CSCO.O

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Ciscos robust financial position is due to the growing and consistent demand for IT solutions and technologies in virtually all public and private enterprises, universities and even home businesses. Ciscos wide distribution base and strategic partnerships with other tech leaders in the market contribute to a fiercely competitive company. V. Competitor Analysis Ciscos business platform is extremely competitive and rapidly changing. The companys vast products and services are facing competition with numerous sellers globally and the overall number of competitors is increasing. The networking, IT solutions and communications market has low barriers for entry and new opportunities for product creation are consistently on hand. Competition is also present in the research, development, manufacturing, supply, distribution, and sales aspects of Ciscos industry. Cisco has a quarterly revenue growth year over year of 0.07 compared to its direct competitors Alcatel-Lucent (ALU), Hewlett-Packard Co. (HPC) and Juniper Networks Inc. (JNPR) which have growth rates of -0.12, -0.03 and -0.06 respectively. In the last 12 months, Cisco maintains positive earnings per share at 1.36 compared to ALUs 0.71 and JNPRs 0.58. Cisco ranks fourth in computer hardware sales in the United States.11 It ranks first in market capitalization within the industry and also first in annual dividend yield out of 26 industry competitors.12

VI.

Brief Summary Cisco is a strong technology stock as it is a solid and booming networking and communications company. It is continually transforming its operations to avail of the economies of strategic alliances, acquisitions and partnerships. It is a focused, innovative and trusted as a leader in building IT investments that develop into valuable assets of a business. Cisco consistently produced solid figures and business fundamentals year after year which keeps this global company a worthy investment as we venture into the future of information technology and communications. For more general or investor information, visit www.cisco.com.

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http://finance.yahoo.com/q/co?s=CSCO+Competitors http://finance.yahoo.com/q/in?s=CSCO

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