Upcoming AWS Coverage on Palo Alto Networks Post-Earnings Results
LONDON, UK / ACCESSWIRE / March 3, 2017 / Active Wall St. announces its post-earnings coverage on Cisco Systems, Inc. (NASDAQ: CSCO). The Company announced its second quarter fiscal 2017 operational results on February 15, 2017. The network equipment provider's increased its quarterly dividend by approximately 12%. Register with us now for your free membership at:
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One of Cisco Systems' competitors within the Networking & Communication Devices space, Palo Alto Networks, Inc. (NYSE: PANW), released its financial results for its fiscal second quarter 2017 ended January 31, 2017 after US markets closed on Tuesday, February 28, 2017. AWS will be initiating a research report on Palo Alto Networks in the coming days.
Today, AWS is promoting its earnings coverage on CSCO; touching on PANW. Get our free coverage by signing up to:
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Earnings Reviewed
For the period ended January 28, 2017, Cisco reported revenue of $11.58 billion, down 2% on a y-o-y basis, however it exceeded analysts' consensus for revenue of $11.55 billion.
During Q2 FY17, the Company's product revenue declined 4% to $8.49 billion, while service revenue grew 5% to $3.09 billion compared to the year ago same period. Product revenue performance was led by Security which increased 14% on a y-o-y basis to $528 million. The Company's Collaboration and Wireless product revenue increased by 4% to $1.06 billion and 3% to $632 million, respectively. NGN Routing, Switching and Data Center product revenue decreased by 10% to $1.82 billion, 5% to $3.31 billion, and 4% to $790 million, respectively. Service Provider Video product revenue had decreased by 41% to $241 million. Cisco's revenue by geographic segment was: Americas down 3%, EMEA flat, and APJC down 3%.
For Q2 FY17, Cisco's GAAP operating income was $2.9 billion, down 12%, with GAAP operating margin of 25.0%. The Company's non-GAAP operating income was $3.6 billion, down 3%, with non-GAAP operating margin at 31.0%.
On a GAAP basis, Cisco reported net income of $2.3 billion and earnings per share of $0.47 per share. After adjustments for share-based compensation, discontinued businesses and other effects, Cisco claimed earnings of $2.9 billion, a decrease of 2%, and earnings per share was flat at $0.57. The Company's earnings surpassed market expectations of $0.56 per share.
Margin Matters
On a GAAP basis, Cisco's Q2 FY17 total gross margin and product gross margin were 62.8% and 61.1%, respectively. The decrease in the product gross margin compared with 61.3% in Q2 FY16 was primarily due to pricing and to a lesser extent product mix, partially offset by continued productivity improvements and the divestiture of the SP Video CPE Business. Non-GAAP total gross margin and product gross margin were 64.1% and 62.4%, respectively for the reported quarter. The decrease in non-GAAP product gross margin compared with 63.3% in Q2 FY16 was primarily due to pricing and to a lesser extent product mix, partially offset by continued productivity improvements.
Cisco's Q2 FY17 GAAP service gross margin was 67.7% and non-GAAP service gross margin was 68.8%. Total gross margins by geographic segment were 64.4% for the Americas, 65.6% for EMEA, and 60.4% for APJC.
Balance Sheet and Other Financial Highlights
At the end of Q2 FY17, Cisco's cash and cash equivalents and investments were $71.8 billion compared with $71.0 billion at the end of Q1 FY17, and compared with $65.8 billion at the end of FY16. The Company's total cash and cash equivalents and investments available in the United States at the end of Q2 FY17 were $9.6 billion.
Cisco recorded deferred revenue of $17.1 billion, up 13% in total, with deferred product revenue up 19%, driven largely by subscription-based and software offerings. Deferred service revenue was up 9%. The portion of product deferred revenue related to recurring software and subscription businesses grew 51%.
In Q2 FY17, Cisco declared and paid a cash dividend of $0.26 per common share, or $1.3 billion. For the reported quarter, the Company repurchased approximately 33 million shares of common stock under its stock repurchase program at an average price of $30.33 per share for an aggregate purchase price of $1.0 billion. As of January 28, 2017, Cisco had repurchased and retired 4.7 billion shares of Cisco's common stock at an average price of $21.17 per share for an aggregate purchase price of approximately $98.6 billion since the inception of the stock repurchase program. The remaining authorized amount for stock repurchases under this program is approximately $13.4 billion with no termination date. Cash flow from operating activities was $3.8 billion, a decrease of 4% compared with $3.9 billion for Q2 FY16.
On January 24, 2017, Cisco announced its intent to acquire AppDynamics, Inc., a privately held application intelligence software Company. The acquisition is expected to close in Q3 FY17.
Cisco has also declared a quarterly dividend of $0.29 per common share, a $0.03 per share increase over the previous quarter's dividend, to be paid on April 26, 2017, to all shareholders of record as of the close of business on April 06, 2017.
Business Outlook for Q3 FY 2017
For Q3 FY17, Cisco estimates -2% to break-even revenue growth with GAAP EPS to be $0.44 to $0.49 which is lower than non-GAAP EPS by $0.10 to $0.13 per share in Q3 FY17.
Stock Performance
On Thursday, March 02, 2017, the stock closed the trading session at $34.39, marginally falling 0.15% from its previous closing price of $34.44. A total volume of 16.09 million shares have exchanged hands. Cisco Systems' stock price rallied 11.95% in the last month, 10.88% in the previous six months, and 32.39% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have surged 14.78%. The stock is trading at a PE ratio of 17.70 and has a dividend yield of 3.37%.
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