Cisco Systems Inc. (CSCO: chart)
Q1 2009 Earnings Call Transcript
November 5, 2008 1:30 p.m. PT

Executives

Blair Christie – Senior Vice President of Corporate Communications
John Chambers - Chairman and Chief Executive Officer
Frank Calderoni – Executive Vice President & Chief Financial Officer
Ned Hooper - Senior Vice President of Corporate Development and Consumer Group

Analysts

Simona Jankowski - Goldman Sachs
Mark Sue - RBC Capital Markets
Etai Kidron - Oppenheimer and Company
Jeff Evenson - Sanford C. Bernstein
Tal Liani – Merrill Lynch & Co., Inc.
Scott Coleman - Morgan Stanley
Ehud Goldblum – JPMorgan
Paul Silverstein - Credit Suisse

Presentation

Operator

Welcome to Cisco Systems first quarter fiscal year 2009 financial results conference call. At the request of Cisco Systems, today''s conference is being recorded. If you have any objections, you may disconnect.

Now I would like to introduce Ms. Blair Christie, Senior Vice President of Corporate Communications for Cisco Systems. Ma’am, you may begin.

Blair Christie

Great. Thank you Kim and good afternoon everyone. Welcome to our 75th quarterly conference call. This is Blair Christie and I’m joined by John Chambers, our Chairman and CEO, Frank Calderoni, Chief Financial Officer, Rick Justice, Executive Vice President of Worldwide Operations and Business Development, as well as Ned Hooper, Senior Vice President of Corporate Development and Consumer Group, and Rob Lloyd, Senior Vice President of Sales for US, Canada, and Japan.

The Q1 fiscal year 2009 press release is on Full National Market Wire and the European Financial and Technology Wire, and on the Cisco website at www.Cisco.com. I would like to remind you that we have a corresponding webcast with slides. In those slides, you will find the financial information we cover during this conference call, as well as additional financial metrics and analysis that you may find helpful. Additionally, downloadable Q1 financial statements will be available following the call, including revenue segments by product and geography, income statements, full GAAP to non-GAAP reconciliation information, balance sheets, and cash flow statements can be found on our website in the Investor Relations section. Click on the financial section of the website to access the webcast slides and these documents.

A replay of this call will be available via telephone from November 5th through November 12th at 866-357-4205 or 203-369-0122 for international callers and is also available from November 5th through January 16th on Cisco’s Investor Relations website at www.Cisco.com/go/Investors.

Throughout this conference call we will be referencing both GAAP and non-GAAP financial results. As is customary with many companies, we have used this Q1 time period to reflect certain immaterial reclassifications to our financial statements and results, which will also be reflected in our Form 10-Q. The financial results in the press release are unaudited. The matters we will be discussing today include forward-looking statements, and as such are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent annual report on Form 10-K and any applicable amendments which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements.

Unauthorized recording of this conference call is not permitted, and I will now turn it over to John for his commentary on the quarter, John.

John Chambers

Thank you Blair. During the opening comments of the conference call, I will focus on what I view to be the key takeaways for Q1 fiscal year 2009, an update on why we continue to be comfortable with our long term growth goals of 12% to 17%, assuming that the global economy returns to normal growth rates, a very candid discussion about what we are seeing in the market on a global basis relative to Q1 and its effect on our Q2 expectations, then finally our revenue guidance for Q2 with the appropriate caveats.

Frank will follow these opening comments with additional detail on Q1 fiscal year 2009. The third section of the call will focus on business momentum and strategy from a geographic, product, customer statement perspective. Frank will then follow with additional financial parameters around our guidance. I will then wrap it up with some comments in terms of Cisco’s momentum going into Q2, and finally our Q&A session.

Q1FY2009 was a solid quarter for Cisco from a revenue and an earnings per share perspective, especially given the many challenges that we are all seeing occur in the global marketplace. In terms of those areas that we can control or influence, we continue to feel very comfortable with both our progress in the quarter and our long-term vision and differentiated strategy as we move into new market adjacencies.

We exited Q1 with an extremely strong position in the marketplace, approximately $27 billion in cash and investments, solid balance from the product, geographic, and customer segments perspective, perhaps one of the broadest balances across the IT industry, continued success in being the number one and number two player in most of our 20 plus targeted product areas, an innovation engine that results in product leadership across the broadest range of products that we’ve had in our history, combined with a product pipeline of new innovation that we believe is also the strongest we have ever had.