21 November 2007

CSCO: Financial Analysis through October 2007 (Updated)

We previously posted an analysis of Cisco Systems' (CSCO) preliminary report on the October 2007 quarter. Cisco subsequently submitted a more complete quarterly report in a 10-Q filed with the SEC.

The additional data in the 10-Q did not affect the analysis results, and the gauge scores were unchanged. For details, please see the earlier posting.

It was interesting to read in the 10-Q about the Cisco's stock repurchase program. Over the last 6 years, Cisco spent $46.2 billion on its own shares. The authorized amount was $52 billion, so we can give Cisco credit for doing what they said they would -- unlike some other companies that are better at gaining the positive publicity that results from a large authorization than they are at spending the full amount. Some companies repurchase the shares but then grant them to employees in the the form of stock options.

On 15 November 2007, Cisco added another $10 billion to the repurchase authorization. Coupled with the $5.8 billion remaining from earlier authorizations, the company, therefore, is postured to spend another $15.8 billion on its shares. If we assume an average per-share cost of $30 billion, Cisco could buy 527 million more shares. This would be 8.7 percent of the 6.082 million shares outstanding on 31 October 2007.

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