Cisco 2003 Annual Report Download - page 5

2003 ANNUAL REPORT 3
“WE CONTINUED TO ACHIEVE SOME OF THE BEST RESULTS IN OUR COMPANY’S
HISTORY WHILE MAINTAINING A PASSIONATE FOCUS ON MEETING THE NEEDS
OF OUR CUSTOMERS, PARTNERS, INVESTORS, AND EMPLOYEES.”
In fiscal 2003, we continued to be very active with our
share repurchase program. During fiscal 2003, we repur-
chased approximately $6 billion or 424 million shares of
our stock at an average price of $14.10. Our cumulative
purchases since the inception of the repurchase program
were approximately $7.8 billion, or 548 million shares at
an average price of $14.29, leaving a remaining approved
repurchase amount of approximately $5.2 billion at the
end of fiscal 2003.
Moving forward, we have articulated three long-term
financial priorities for Cisco. First, we must continue to
seek out profitable growth opportunities while supporting
Cisco’s current goal of 20 percent pro forma profit after
tax margins. Second, we must continue to improve our
productivity, as measured in terms of operating expense
as a percentage of revenue. And finally, we must maintain
our healthy and conservative balance sheet, including
strong liquidity, low days sales outstanding (DSO), and
inventory turns in line with our stated goals of 7 to 8 turns.
We continue to evaluate the most effective use of our
cash. Today, we believe the share repurchase program,
along with ongoing strategic investments and a strong
cash balance, are in the best interest of our shareholders.
As we enter into the next fiscal year, we are absolutely
focused on providing an attractive return on investment to
our shareholders, and we intend to do so while maintaining
the highest standards of integrity, including accurate,
timely, and transparent financial reporting.
MARKET PERFORMANCE AND GROWTH OPPORTUNITIES
In terms of Cisco’s business, we are focused on three broad
areas to drive growth: our core technologies, routing and
switching; the service provider market; and our Advanced
Technology markets. While we participate in four key
markets—enterprise, service provider, commercial, and
consumer—the service provider area provides the greatest
potential to utilize Cisco products and services. We believe
our core technologies and Advanced Technologies will also
drive growth through all of our key markets. We achieved
solid results in fiscal 2003 within these areas, and have
built a strong foundation for growth in fiscal 2004.
First, in routing and switching, we sustained our technology
leadership through performance enhancements and by
providing industry-leading solutions to our customers.
During the fiscal year, we introduced many new products
that combined significant performance enhancements with
price reductions, ensuring a balance of customer success,
Cisco’s profitability, and our leadership in the marketplace.
Second, we made important progress with our service
provider customer base in all of our key geographies,
despite a challenging capital spending environment. In
a market that has contracted, we executed well and are
pleased with our resource investment, expanding customer
partnerships, and key technology and architectural wins.
Our investments and commitments in the service provider
market over the last two to three years, and the results they
are yielding, continue to meet and exceed our expectations.