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Gross Margin by Segment
The following table presents the total gross margin for each segment (in millions, except percentages):
AMOUNT PERCENTAGE
Years Ended July 25, 2015 July 26, 2014 July 27, 2013 July 25, 2015 July 26, 2014 July 27, 2013
Gross margin:
Americas .............................. $ 18,670 $ 17,379 $ 17,887 63.0% 62.6% 62.5%
EMEA ................................. 7,705 7,700 7,876 62.5% 64.1% 64.5%
APJC .................................. 4,307 4,252 4,637 60.0% 57.8% 59.8%
Segment total .......................... 30,682 29,331 30,400 62.4% 62.2% 62.5%
Unallocated corporate items (1) ......... (1,001) (1,562) (960)
Total ................................ $ 29,681 $ 27,769 $ 29,440 60.4% 58.9% 60.6%
(1) The unallocated corporate items for the years presented include the effects of amortization and impairments of acquisition-related intangible assets, share-
based compensation expense, significant litigation and other contingencies, impacts to cost of sales from purchase accounting adjustments to inventory, charges
related to asset impairments and restructurings, and certain other charges. We do not allocate these items to the gross margin for each segment because
management does not include such information in measuring the performance of the operating segments.
Fiscal 2015 Compared with Fiscal 2014
We experienced a gross margin percentage increase in our Americas segment due to productivity improvements partially offset
by unfavorable impacts from pricing. The product mix was flat in this geographic segment as the impact of decreased revenue
from our relatively lower margin Service Provider Video products offset the increase in revenue from our relatively lower margin
Cisco Unified Computing System products.
The gross margin percentage decrease in our EMEA segment was due primarily to unfavorable impacts from pricing and mix.
The unfavorable mix impact was driven by an increase in revenue from our relatively lower margin Cisco Unified Computing
System products. Lower service gross margin also contributed to the decrease in the overall gross margin in this segment.
The APJC segment gross margin percentage increased due to productivity improvements and a favorable mix impact, partially
offset by unfavorable impacts from pricing. The favorable mix impact was driven by a decrease in revenue from our relatively
lower margin Service Provider Video products and an increase in revenue from certain of our higher margin core products.
The gross margin percentage for a particular segment may fluctuate, and period-to-period changes in such percentages may or
may not be indicative of a trend for that segment. Our product and service gross margins may be impacted by economic
downturns or uncertain economic conditions as well as our movement into new market opportunities, and could decline if any of
the factors that impact our gross margins are adversely affected in future periods.
Fiscal 2014 Compared with Fiscal 2013
The Americas segment experienced a slight gross margin percentage increase due to the impact of productivity improvements in
this geographic segment. Partially offsetting this favorable impact to gross margin were negative impacts from pricing and an
unfavorable mix. The unfavorable mix impact was driven by revenue increases in our Cisco Unified Computing System products
and lower sales of our higher margin core products, partially offset by decreased revenue from our Service Provider Video
products.
The gross margin percentage decrease in our EMEA segment was due primarily to the unfavorable impacts from pricing, as well
as an unfavorable mix impact, partially offset by productivity improvements in this geographic segment. The unfavorable mix
impact was driven by an increase in revenue from our Cisco Unified Computing System products.
Our APJC segment gross margin percentage decreased primarily as a result of unfavorable impacts from pricing, and also as a
result of an unfavorable mix. The unfavorable mix impact was driven by an increase in revenue from our Cisco Unified
Computing System products. Partially offsetting these factors were impacts from productivity improvements and higher service
gross margin in this geographic segment.
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