. Q3 Net Sales: $10.4 billion (increase of 27% year over year)
. Q3 Net Income: $2.2 billion GAAP; $2.5 billion non-GAAP
. Q3 Earnings per Share: $0.37 GAAP (increase of 61% year over year); $0.42 non-GAAP (increase of 40% year over year)
. Q3 Cash Flows from Operations: $3.0 billion (increase of 49% year over year)
SAN JOSE, Calif. – May 12, 2010 - Cisco, the worldwide leader in networking that transforms how people connect, communicate and collaborate, today reported its third quarter results for the period ended May 1, 2010. Cisco reported third quarter net sales of $10.4 billion, net income on a generally accepted accounting principles (GAAP) basis of $2.2 billion or $0.37 per share, and non-GAAP net income of $2.5 billion or $0.42 per share.

"Our financial results were outstanding, achieving record level revenue and earnings per share results. We witnessed a return to strong balanced growth across geographies, products and customer segments that we haven't seen since before the global economic challenges began. We emerge from this downturn gaining market share, a larger share of the total wallet spend of our customers, dramatically improved customer relations as a trusted technology and business partner, and having next-generation products in almost every product category. It is clear that our game plan for how to handle economic downturns is hitting on all cylinders," said John Chambers, chairman and CEO of Cisco.

Chambers continued, "Our innovation and operational engines are exceeding our expectations. This applies to products, organization structures, business models, and movements into 30+ new market adjacencies. From almost every measurement perspective – revenues, earnings per share, new products, successful acquisitions, internal startups – our results in Q3 were the proof points that our strategy is working and was probably the strongest quarter in our history."

GAAP Results
Q3 2010 Q3 2009 Vs. Q3 2009
Net Sales $10.4 billion $8.2 billion 27.0%
Net Income $2.2 billion $1.3 billion 62.6%
Earnings per Share $0.37 $0.23 60.9%

Non-GAAP Results

Q3 2010 Q3 2009 Vs. Q3 2009
Net Income $2.5 billion $1.8 billion 41.2%
Earnings per Share $0.42 $0.30 40.0%

GAAP net income and GAAP earnings per share for the third quarter and first nine months of fiscal 2010 include a tax benefit as a reduction of the provision for income taxes of $158 million or $0.03 per share. This did not impact our non-GAAP results. A reconciliation between net income on a GAAP basis and non-GAAP net income is provided in the table on page 6.

The third quarter of fiscal 2010 had 14 weeks compared with 13 weeks in the third quarter of fiscal 2009.

Net sales for the first nine months of fiscal 2010 were $29.2 billion, compared with $27.6 billion for the first nine months of fiscal 2009. Net income for the first nine months of fiscal 2010, on a GAAP basis, was $5.8 billion or $0.99 per share, compared with $5.1 billion or $0.86 per share for the first nine months of fiscal 2009. Non-GAAP net income for the first nine months of fiscal 2010 was $6.9 billion or $1.18 per share, compared with $6.1 billion or $1.04 per share for the first nine months of fiscal 2009.

Cisco will discuss third 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. To view a video of Cisco's CFO discussing third quarter results, visit http://blogs.cisco.com

Other Financial Highlights
Cash flows from operations were $3.0 billion for the third quarter of fiscal 2010, compared with $2.5 billion for the second quarter of fiscal 2010, and compared with $2.0 billion for the third quarter of fiscal 2009.

Cash and cash equivalents and investments were $39.1 billion at the end of the third quarter of fiscal 2010, compared with $35.0 billion at the end of fiscal 2009, and compared with $39.6 billion at the end of the second quarter of fiscal 2010.

During the third quarter of fiscal 2010, Cisco repurchased 87 million shares of common stock at an average price of $25.76 per share for an aggregate purchase price of $2.25 billion. As of May 1, 2010, Cisco had repurchased 3.0 billion shares of Cisco common stock at an average price of $20.70 per share for an aggregate purchase price of approximately $62.7 billion since the inception of the stock repurchase program. The remaining authorized repurchase amount as of May 1, 2010 was $9.3 billion with no termination date.

Days sales outstanding in accounts receivable (DSO) at the end of the third quarter of fiscal 2010 were 39 days, unchanged from the end of the second quarter of fiscal 2010, and compared with 27 days at the end of the third quarter of fiscal 2009.

Inventory turns on a GAAP basis were 11.5 in the third quarter of fiscal 2010, compared with 12.1 in the second quarter of fiscal 2010, and compared with 11.0 in the third quarter of fiscal 2009. Non-GAAP inventory turns were 11.1 in the third quarter of fiscal 2010, compared with 11.7 in the second quarter of fiscal 2010, and compared with 10.7 in the third quarter of fiscal 2009.

"We delivered outstanding results in our third fiscal quarter which builds on the strong momentum we saw coming out of our second quarter. Our net income in the quarter grew to $2.2 billion on a GAAP basis, representing solid growth of 63 percent year over year. This stability in our earnings, coupled with strong margins, is contributing to our continued strategic ability to generate cash in the business," said Frank Calderoni, chief financial officer for Cisco. "It is clear that our focus on both operational excellence and investing in innovation is continuing to produce strong results."

Select Global Business Highlights
Cisco completed its voluntary offer for TANDBERG, a global leader in video communications, and launched a compulsory acquisition of the rest of the outstanding issued shares of TANDBERG. Through the combined companies, the Cisco TelePresenceTM business provides customers with access to a fully integrated architecture, a comprehensive network-based endpoint and infrastructure portfolio, and a suite of unique experiences, customizable applications and flexible deployment models.
Cisco and VMware launched an initiative that provides new program benefits for channel partners delivering Cisco Unified Computing SystemTM and VMware vSphere.
Cisco Innovation
Cisco introduced the Cisco CRS-3 Carrier Routing System, designed to serve as the foundation for the next-generation Internet and to transform the broadband and entertainment industries.
New Cisco mobile collaboration applications for the Apple iPad and BlackBerry smartphones offer millions of users access to Cisco WebExTM online meetings.
Cisco introduced the second-generation Cisco Unified Computing System with up to four times the compute capacity compared to the first generation, designed to reduce IT infrastructure costs and complexity, provide better support for data center virtualization, and improve business agility.
Cisco introduced the Cisco ASR 5000, providing a comprehensive end-to-end Internet Protocol Next-Generation Network (IP NGN) architecture and offering mobile operators a platform specifically designed to accommodate the rapid growth of mobile Internet traffic and mobile multimedia applications.
Cisco delivered on its borderless networks vision with the introduction of a new series of fixed-switching product lines – the Cisco Catalyst® 3560/3750-X Series and 2960-S Series – that provide a comprehensive suite of new professional services offerings, flexible entry-level pricing, and an enhanced limited lifetime warranty.
Cisco announced its delivery of the borderless mobility experience with the latest new wireless innovation: CleanAir Technology designed to help accelerate the transition to the mobile workplace.
Select Customer Announcements
NTT America plans to deploy the Cisco ASR 9000 Series router to scale its Next-Generation Internet Protocol Network infrastructure.
The State of Colorado and Cisco joined forces to strengthen social, economic and environmental sustainability through Smart+Connected Communities.
Bank of America and Cisco announced an agreement to deploy the largest network of Cisco TelePresence systems, with an initial 200 units being installed across the bank's global operations by year-end.
Incheon Metropolitan City and Cisco announced a collaboration to build the Incheon Free Economic Zone (IFEZ) into a high-tech, globally competitive and environmentally sustainable smart connected city in Korea.
Australia's Deakin University has transitioned to the Cisco Unified Computing System platform for its next-generation data center.
Cisco announced that MTN Nigeria, in collaboration with Cisco and Resourcery plc, became the first service provider in Nigeria to offer Cisco TelePresence.
BT delivered virtual fitting rooms to Tommy Hilfiger, based on BT's Unified Communications Video solution coupled with Cisco's TANDBERG technology, to help design teams in Amsterdam and New York collaborate more effectively with manufacturing teams in Hong Kong.
Netherlands-based telecom and ICT service provider KPN selected the Cisco CRS-3 Carrier Routing System as the foundation for its core Internet Protocol Next-Generation Network (IP NGN).