- Q2 Net Sales: $9.1 billion (decrease of 7.5% year over year)
- Q2 Net Income: $1.5 billion GAAP; $1.9 billion non-GAAP
- Q2 Earnings per Share: $0.26 GAAP (decrease of 21.2% year over year); $0.32 non-GAAP (decrease of 15.8% year over year)
- Q2 Cash Flows from Operations: $3.2 billion
- Total Cash, Cash Equivalents and Investments: $29.5 billion
SAN JOSE, Calif. – February 4, 2009 – Cisco, the worldwide leader in networking that transforms how people connect, communicate and collaborate, today reported its second quarter results for the period ended January 24, 2009. Cisco reported second quarter net sales of $9.1 billion, net income on a generally accepted accounting principles (GAAP) basis of $1.5 billion or $0.26 per share, and non-GAAP net income of $1.9 billion or $0.32 per share.

"Cisco showcased solid financial strength during a period of significant economic challenge," said John Chambers, chairman and chief executive officer, Cisco. "We remain comfortable with our long-term vision and strategy as we move into new market adjacencies and prioritize our existing opportunities. We intend to accelerate the alignment of our resources to prioritize future growth opportunities, gradually decrease our operating expenses, while building even stronger customer relationships to position Cisco for ongoing, long-term market leadership."

GAAP Results
Q2 2009 Q2 2008 Vs. Q2 2008
Net Sales $9.1 billion $9.8 billion -7.5%
Net Income $1.5 billion $2.1 billion -27.0%
Earnings per Share $0.26 $0.33 -21.2%

Non-GAAP Results

Q2 2009 Q2 2008 Vs. Q2 2008
Net Income $1.9 billion $2.4 billion -21.5%
Earnings per Share $0.32 $0.38 -15.8%

Net sales for both the first six months of fiscal 2009 and fiscal 2008 were $19.4 billion. Net income for the first six months of fiscal 2009, on a GAAP basis, was $3.7 billion or $0.63 per share, compared with $4.3 billion or $0.68 per share for the first six months of fiscal 2008. Non-GAAP net income for the first six months of fiscal 2009 was $4.4 billion or $0.74 per share, compared with $4.9 billion or $0.78 per share for the first six months of fiscal 2008.

A reconciliation between net income on a GAAP basis and non-GAAP net income is provided in the table on page 6.

Cisco will discuss second quarter results and business outlook on a conference call and webcast at 1:30 p.m. Pacific Time today. Call information and related charts are available at http://www.cisco.com/go/investors.

Other Financial Highlights
Cash flows from operations were $3.2 billion for the second quarter of fiscal 2009, compared with $2.4 billion for the second quarter of fiscal 2008, and compared with $2.7 billion for the first quarter of fiscal 2009.
Cash and cash equivalents and investments were $29.5 billion at the end of the second quarter of fiscal 2009, compared with $26.2 billion at the end of fiscal 2008, and compared with $26.8 billion at the end of the first quarter of fiscal 2009.
Deferred revenue was $9.3 billion at the end of the second quarter of fiscal 2009, compared with $8.9 billion at the end of fiscal 2008, and compared with $8.8 billion at the end of the first quarter of fiscal 2009.
During the second quarter of fiscal 2009, Cisco repurchased 37 million shares of common stock at an average price of $16.40 per share for an aggregate purchase price of $600 million. As of January 24, 2009, Cisco had repurchased and retired 2.7 billion shares of Cisco common stock at an average price of $20.57 per share for an aggregate purchase price of approximately $55.2 billion since the inception of the stock repurchase program. The remaining authorized repurchase amount as of January 24, 2009 was $6.8 billion with no termination date.
Days sales outstanding in accounts receivable (DSO) at the end of the second quarter of fiscal 2009 were 29 days, compared with 34 days at the end of the fourth quarter of fiscal 2008, and compared with 29 days at the end of the first quarter of fiscal 2009.
Inventory turns on a GAAP basis were 11.6 in the second quarter of fiscal 2009, compared with 11.9 in the fourth quarter of fiscal 2008, and compared with 11.9 in the first quarter of fiscal 2009. Non-GAAP inventory turns were 11.3 in the second quarter of fiscal 2009, compared with 11.6 in the fourth quarter of fiscal 2008, and compared with 11.6 in the first quarter of fiscal 2009.
"Despite a clearly challenging macro-economic environment, Cisco generated $3.2 billion in cash flows from operations in our second quarter, resulting in total cash and investments of $29.5 billion," said Frank Calderoni, chief financial officer, Cisco. "I believe our business model and financial position provide us with two key capabilities: speed and flexibility. We believe we have been able to minimize risk to our business, while still positioning Cisco to take advantage of new opportunities."

Select Global Business Highlights
Cisco achieved the first major milestone in its investment into South Africa under the National Industrial Participation Programme with the first graduates of Cisco's Global Talent Acceleration Program.

Cisco celebrated the first anniversary of its Globalisation Centre East, which has emerged as a world-class model for technology growth, innovation and talent.

Acquisitions and Investments
Cisco completed the acquisition of Denver-based Jabber, Inc., a provider of presence and messaging software. Jabber is now part of the Cisco Collaboration Software Group.
Cisco announced an increased equity stake in VMware, Inc., taking Cisco's holding to approximately 1.7 percent of VMware's total outstanding common stock.

Cisco Innovation
Cisco announced the new Cisco® Aironet® 1140 Series Access Point, taking 802.11n to the enterprise mainstream with new solutions that are designed to offer ease of deployment, reliability and performance.
Cisco outlined its strategy for bringing Unified Computing to the Data Center.
Cisco extended its web conferencing and collaboration capabilities to the Apple iPhone 3G user experience, with the Cisco WebExTM meetings iPhone application.
Cisco introduced the Cisco 9000 Series Aggregation Services Router designed to meet service providers' need to increase the speed, longevity, services richness and efficiency of the network edge.
Cisco announced the Linksys® by Cisco Wireless Home Audio solution which uses Wireless-N technology to deliver a rich audio experience to any room in the home and the Linksys by Cisco Media Hub designed to simplify access and interaction with digital content by gathering, organizing and presenting all the digital video, photos and music that users have spread among various devices in the home.
Cisco announced the Cisco EosTM software platform, a hosted, white-label software platform that allows media and entertainment companies to create, manage and grow online communities around their content.

Select Customer Announcements
Cisco brings high-definition video and advanced communications technology to the new Yankee Stadium, creating the ultimate fan experience.
Cisco, the National Hockey League and the National Hockey League Players' Association announced a new strategic agreement whereby Cisco will support the league's strategic digital media initiatives with Cisco technology designed to help the league serve millions of avid hockey fans across North America with digital video of their favorite teams and players.
Deutsche Telekom expanded its broadband infrastructure with the implementation of the Cisco IP Service Engine technology to help meet customer demand.
Hungarian service provider Magyar Telekom implemented Cisco TelePresenceTM virtual meeting rooms to connect its head office with the company's southeast European subsidiaries.
In Malaysia, YTL e-Solutions Berhad entered into a strategic collaboration with Cisco to establish a WiMAX core network in Peninsular Malaysia.
TRUST National Bank in Russia completed the upgrade of its country-wide communications network with Cisco Unified Communications to offer highly secure, uninterrupted, multiservice communications across Russia.
In Japan, Capcom Co., Ltd. deployed the Cisco Unified Communications solution to improve employee efficiency through coordination of phones, PCs, and presence.
SENA, the Colombian National Learning Service, selected Cisco to upgrade and integrate its 175 offices, offering more Colombian citizens access to education and training programs virtually.