Cisco 2005 Annual Report Download - page 11

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Third, we maintained our strong and conservative balance
sheet, while aggressively reducing outstanding shares
through our share repurchase program. At the end of scal
2005, cash and investments totaled $16.1 billion, days sales
outstanding (DSOs) were 31, and annualized inventory turns
were 6.6. During scal 2005, we repurchased $10.2 billion,
or 540 million shares of our stock. Cash used for these re-
purchases was generated primarily through operations.
At the end of scal 2005, our cumulative purchases since
the inception of the share repurchase program in September
2001 were approximately $27.2 billion, or 1.5 billion shares,
at an average price of $18.15. This is a decrease of more
than 13 percent in the weighted average diluted shares
outstanding since the inception of
the program. The program’s remain-
ing approved repurchase amount is
approximately $7.8 billion.
Our strong cash position provides
investment opportunities for Cisco. The
Board of Directors routinely evaluates
growth and technology leadership
objectives with the goal of providing
an attractive return on investment for
our shareholders. Our technology in-
vestments are designed to extend our
current product leadership through
new offerings, as well as feature and
functionality enhancements. We believe
these investments will allow us to capi-
talize on new advanced technologies
and emerging geographic markets.
These investments include areas such
as enterprise IP communications, net-
work security, and wireless networking.
We believe ongoing strategic invest-
ments, along with our share repurchase
program and strong cash balance,
are in the best interest of Cisco and
our shareholders.
Balanced Growth
Cisco’s success in scal 2005 can be attributed to the bal-
ance achieved in almost all of our product families, customer
market segments, and geographies. This, combined with our
ability to continuously innovate and expand the industry and
our markets, is a signicant driver of our success.
In scal 2005, Cisco’s six advanced technologies showed
the highest revenue growth of our product groups. Revenue
from advanced technologies increased 32 percent year over
year to $4.4 billion. The six advanced technologies include:
enterprise IP communications, home networking, optical
networking, security, storage area networking, and wireless
technology. During scal 2005, security and enterprise IP
communications achieved our initial goal of an annual rev-
enue run rate of approximately $1 billion. We shipped our
6-millionth IP phone. We continue to expand our advanced
technologies and have set an aggressive goal of announcing
several new advanced technologies in scal 2006.
This year we introduced the integrated services router, one of
the industry’s most comprehensive enterprise solutions for
branch ofces. The integrated services router is designed to
allow customers to customize solutions
by adding security, voice, and wireless
capabilities to a single routing platform.
In our core switching families, we made
ve key product announcements in scal
2005, and Cisco’s switching products
continue to maintain a number-one
market share position.
We also experienced balance across
all key customer market segments, with
solid growth in the service provider,
enterprise, and commercial segments.
Our consumer-oriented Linksys divi-
sion had the highest annual growth by
market segment of approximately 40
percent year over year. In terms of our
balance among Cisco’s ve geographic
areas in scal 2005, we experienced
strong product revenue growth in almost
all of our geographies, increasing total
product revenue by 12 percent on an
annual basis.
We were also very pleased with our
ability to enter new markets and gain
leadership from both a market share
and innovation perspective. As mentioned earlier, we believe
innovation comes from a combination of internal develop-
ment, partnerships, and acquisitions. In terms of key strategic
alliances, we accelerated our growth opportunities with our
strategic partners. In scal 2005, we continued our strategy
of taking good, solid business risks by completing 17
acquisitions to further extend our talent and technology
opportunities for both our core routing and switching
products as well as our advanced technologies. We believe
we are well-positioned to take advantage of future growth
opportunities, and we are condent and optimistic about the
areas of the business that we can control and inuence.