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Cisco Systems, Inc. 3
Annual Report 2012
Letter to Shareholders
2012, including $48.7 billion in cash,
cash equivalents, and investments
held globally. During the fiscal year, we
generated $11.5 billion in cash from
operations. We continue to focus on
effectively delivering maximum return
on invested capital and enabling growth
demonstrated by the strong free cash
flow generated during the fiscal year.
In terms of net sales from a geographic
standpoint, comparing fiscal 2012
performance to fiscal 2011, we saw
revenue increases across all three
geographic regions, including 6% in the
Americas; 4% in Europe, Middle East, and
Africa (EMEA); and 13% in Asia Pacific,
Japan, and China (APJC). We were
especially pleased with our growth in
emerging countries, and we believe that
Russia, China, Brazil, Mexico, and India
have strong potential to contribute to our
long-term growth. We plan to continue to
invest in our emerging markets business,
from where, we believe, the majority of
global GDP growth will come in future
years.
From a technology product perspective,
we saw growth across all of our major
product categories during fiscal 2012.
In Switching and NGN Routing, while
many of our peers reported negative
growth, we saw solid revenue growth
of 3% in Switching and 2% in NGN
Routing, as compared to fiscal 2011,
and we continued to hold or gain
market share in the majority of our key
markets. In the switching market, strong
demand resulting from the transition to
10-Gigabit Ethernet and our Massively
Scalable Data Center (MSDC) customers
helped to increase fixed-configuration
switching revenue growth to double
digits in percentage terms in fiscal
2012. In routing, the transition to our
new platforms is going very well with
the market shift from wireline to wireless
providing us with a true competitive
advantage.
We were very pleased with our Wireless
momentum. Our investment in Service
Provider WLAN has driven one of the
most compelling offerings in the industry,
with revenue in our Wireless category
up 19% in fiscal 2012, as compared
to fiscal 2011. Revenue in our Security
category increased 12%, as compared
to the prior fiscal year. Our Data Center
category grew revenue by 87%, as
compared to fiscal 2011. In our view,
our ability to move first in the data center
market transition—to a unified computing,
storage, and networking solution—has
helped solidify our position as a leader in
next-generation data centers.
We believe the move to a post-PC world,
with its accompanying requirement of
ubiquitous video, will help drive our
Collaboration market success moving
forward. In fiscal 2012, Collaboration
revenue increased 3%, with our Unified
Communications products making solid
strides.
In fiscal 2012, we saw 11% revenue growth
in Service Provider Video. As this market
evolves into the cloud, software becomes
increasingly important and creates the
potential for more profitable growth. We
believe our recently completed acquisition
of NDS Group Limited will help us achieve
profitable growth at a faster pace, as
NDS will help accelerate the delivery of
Cisco’s Videoscape platform and broaden
our opportunities in new service provider
markets.
During the year, we continued to execute
on our strategy of build, buy, partner,
and integrate. From an acquisition