Cisco 2009 Annual Report Download - page 20

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Management’s Discussion and Analysis of Financial Condition and Results of Operations
Emerging Markets
Fiscal 2009 Compared with Fiscal 2008
Net product sales in the Emerging Markets theater decreased across all customer market segments in fiscal 2009 compared with fiscal
2008, primarily due to lower sales to the service provider, commercial and enterprise markets. We also experienced a sales decline in fiscal
2009 across most countries in this theater, with particular weakness in Russia, Brazil, and Mexico. In addition to the impact from lower
shipments, the decline in net product sales in this theater in fiscal 2009 was also due to the timing of revenue recognition for sales involving
financing arrangements. Certain of our customers in the Emerging Markets theater tend to make large and sporadic purchases, and the net
sales related to these transactions may also be affected by the timing of revenue recognition. Further, some customers may continue to
require greater levels of financing arrangements, service, and support in future periods, which may also impact the timing of recognition of
the revenue for this theater.
Fiscal 2008 Compared with Fiscal 2007
Net product sales in the Emerging Markets theater increased in fiscal 2008 due to increased shipments and recognition of previously
deferred revenue. In fiscal 2008, we experienced continued network deployments across our customer markets in this theater, with
particular strength in Brazil and Russia.
Asia Pacific
Fiscal 2009 Compared with Fiscal 2008
The decrease in net product sales in the Asia Pacific theater in fiscal 2009 compared with fiscal 2008 was reflected across all the customer
market segments. The decrease was driven by lower sales in the enterprise and service provider markets, and to a lesser extent in the
commercial market. The year-over-year decline in net product sales was experienced across most of the major countries in this theater,
particularly in South Korea and India. Net product sales in Australia remained relatively flat and China exhibited only a slight decline in net
product sales in fiscal 2009 compared with fiscal 2008.
Fiscal 2008 Compared with Fiscal 2007
The increase in net product sales in the Asia Pacific theater in fiscal 2008 was primarily attributable to the balanced growth in the
enterprise, service provider, and commercial markets. In particular, China and India experienced strong growth in fiscal 2008.
Japan
Fiscal 2009 Compared with Fiscal 2008
Net product sales in the Japan theater decreased in fiscal 2009 compared with fiscal 2008 primarily due to a decline in sales to the service
provider market and a decline in sales to the enterprise market, excluding the public sector. Net product sales to the public sector within
the enterprise market increased in this theater.
Fiscal 2008 Compared with Fiscal 2007
Net product sales in the Japan theater increased in fiscal 2008 primarily due to service providers building out next-generation networks.
18 Cisco Systems, Inc.