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Cisco Systems, Inc. 3
Annual Report 2011
Letter to Shareholders
broad portfolio are key reasons
for our success. While we hit
some bumps in the road in fiscal
2011, overall market dynamics and
changing customer buying habits
aligned to our portfolio are reasons
why we believe we can sustain a
long-term competitive edge.
In fiscal 2011, Cisco reported net
sales of over $43 billion, an increase
of 8% compared to a year ago. Fiscal
2011 product sales were $34.5
billion, up 6% year over year. We
continued to develop the strategic
nature of our customer relationships
as evidenced by our service revenue
growth of 14% year over year to $8.7
billion, representing approximately
20% of our total revenue. Sales
across all of our geographic theaters
were well balanced, with each theater
growing revenue when compared
to fiscal 2010. As we strive for
faster decision making with greater
accountability and alignment to better
support our emerging countries and
our five foundational priorities as
discussed above, beginning in fiscal
2012, we have organized into the
following three geographic regions:
the Americas; Europe, Middle East,
and Africa (“EMEA”); and Asia Pacific,
Japan, and China (“APJC”).
From a product technology
perspective, we saw improvement
in most of our product categories
in fiscal 2011. However, switching
revenue was flat compared with fiscal
2010, due to the combined effect
of continuing transitions taking place
in our product portfolio, lower public
sector spending, and the impact of
increased competitive pressures.
Routing revenue was up
approximately 6% from a year ago,
driven by an 8%, or $334 million,
increase in sales of our high-end
routers. Within high-end router
products, the increase was driven by
higher sales of Cisco Aggregation
Services Routers (ASR) 5000
products from our December 2009
acquisition of Starent and by higher
sales of the Cisco ASR 1000 and
Cisco ASR 9000 products.
Our New Products revenue grew
by 14% to $13.0 billion. Within
this portfolio, our collaboration
sales increased by 31%, or $972
million, due in part to the inclusion
of Tandberg sales within our Cisco
TelePresence systems product line.
In addition, our data center product
sales were also strong, increasing
by 44%, or $491 million, due
primarily to the robust growth of our
Cisco Unified Computing System
products.
In fiscal 2011, net income was $6.5
billion. Earnings per share on a fully
diluted basis were $1.17. Going
forward, our goal is to drive earnings
faster than revenue to deliver
maximum value to shareholders.
We view our strong balance sheet as
a competitive advantage. Total assets
were $87.1 billion at the end of fiscal
2011, including approximately $44.6
billion in cash, cash equivalents,