Cisco 2013 Annual Report Download - page 4

2 Cisco Systems, Inc.
Annual Report 2013
Letter to Shareholders
scal 2012, while earnings per share on a fully diluted
basis were $1.86, representing an increase of 25%
compared with the previous scal year.
Moving on to the balance sheet, in scal 2013 total assets
were $101.2 billion, representing a 10% increase from
scal 2012. Cash, cash equivalents, and investments
were $50.6 billion, and cash from operations increased
12% to $12.9 billion.
We remain highly focused on driving superior shareholder
value through rigorous expense management and strong
cash return to our shareholders. At the beginning of scal
2013, we announced our intent to return a minimum of
50% of our free cash ow annually to shareholders through
dividends and share repurchases. We are pleased to have
met this goal by returning $6.1 billion to shareholders
during the scal year. Our total shareholder return for
scal 2013 was in the top quartile of our technology peer
group, and our commitment to our shareholders with our
capital allocation strategy remains one of our top priorities.
In addition, we invested $6.8 billion in acquisitions during
scal 2013. The aggregate cash used for dividends, share
repurchases, and acquisitions in scal 2013 was over
$12.8 billion.
With respect to Cisco’s scal 2013 revenue performance
by geography, as compared with the prior scal year, the
Americas region grew 8%; Europe, Middle East, and Africa
(EMEA) grew 1%; and Asia Pacic, Japan, and China
(APJC) grew 4%. From a country perspective, we saw
notable growth during the year in the United States, India,
and Mexico. Although we were encouraged by some early
signs of economic stability in Europe—including our own
continued improvement in the northern portion of Europe
and the UK—conditions still vary by region. Challenges also
remain in certain emerging market countries and in Asia
Pacic. In our opinion, this landscape reects a global
economic recovery that has been slow and inconsistent.
From a technology perspective, on a year-over-year
basis, we saw particular strength in Data Center and
Wireless revenue growth. Data Center was up 60%, with
Cisco Unied Computing System (Cisco UCS) growing
63%. Wireless grew 31%, bolstered by the strength of
our broad portfolio, including the successful integration
of our Meraki acquisition. Additionally, Service Provider
Video revenue increased 26%, largely driven by the NDS
acquisition.
We maintain a sharp focus on driving innovation in
our core networking platforms. Switching was up 1%
in revenue compared with fiscal 2012, driven by the
recently introduced Cisco Catalyst 3850 Series Switch,
the industry’s first converged wired and wireless switch,
and the Cisco Nexus switching family of products, which
grew 20% in revenue from the prior year. Although
Next-Generation Network (NGN) Routing was down 2%
in revenue, we believe we are very well positioned in this
category based on the alignment of our portfolio with our
customers’ key priorities.
Security revenue was flat in fiscal 2013 compared with
fiscal 2012, but with our recently announced intent to
acquire Sourcefire, we believe we are taking a major step
toward becoming our customers’ leading security partner.
We expect this acquisition will enable us to provide
continuous and pervasive advanced threat protection
across the entire attack continuum and from any device to
any cloud. Despite a 6% decline in Collaboration revenue,
we remain focused on our collaboration execution.
And Services revenue grew 9% in fiscal 2013 as we
have continued to transition to selling solutions, not just
products. Together with our partners, we continue to win
large multi-year services deals as customers look to us to
help meet their business goals.
We intend to continue to deliver the next wave of
innovation in the industry, from the cloud to the campus.
For example, at Cisco Live, our largest customer event in
June, we previewed our application-centric infrastructure
(ACI) strategy with Insieme. ACI is an innovative
architecture that provides a common management
framework for network, application, security, and IT
operations teams, helping make IT more agile while
reducing application development time. Another example
is Cisco Open Network Environment (ONE), which in our
view is the most comprehensive framework for network
programmability and software-defined networking (SDN).
Since the introduction of Cisco ONE a year ago, we have
more than doubled the number of beta customers, to over
120, who are utilizing Cisco ONE to program, orchestrate,
and manage their networks.
We are successful when we are squarely focused on the
key transitions in the marketplace and highly aligned with
our customers’ priorities. This focus drives our innovation