Cisco FY 4Q15 Earnings Call Notes

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New CEO

“It’s an honor today to lead this call as the CEO of Cisco. While this is only my third week officially in the CEO role, we’ve really hit the ground running since my appointment was announced on May 4”

11B in FCF

“For the full year, we generated strong operating cash flows of $12.6 billion and free cash flow of $11.3 billion. We returned $8.3 billion to our shareholders through share buybacks and dividends, which represented 73% of our free cash flow.”

Switching benefitting from customers connecting everything

“We continue see strength based on, frankly, customers connecting everything, IoE, collaboration. As we continue to drive our collaboration portfolio, all of those video end units require switching ports. Security is driving an element of that, as is the transition we see in wireless.”

[analyst comment] Doesn’t seem to be too impressed with switching performance

“I want to go back to the question on switching because I’m trying to understand. This is a major upgrade, and still we don’t see the numbers picking up materially. The sequential growth we’re seeing is below what we’ve seen the last two years, and I’m wondering. Can you go over what’s offsetting the growth in Nexus 3000 and Nexus 9000? Why are the numbers not showing much greater increase given the magnitude of the cycle?”

Strength in commercial is because shifted selling morion to align with business issues. Commercial customers tend to be early adopters

“I think the key is that we have really shifted both our solutions and our technology as well as our selling motion and our services capability to be much more tightly aligned with how the technology aligns to our customers’ business issues. And I think we’re doing that very well in the enterprise, and I think the teams have done a really good job of that in commercial. And those commercial customers, those midrange customers, we see it time and time again. They tend to be the early adopters of our new technology because they view it as a way to accelerate their business, to drive their competitiveness, and they just always seem to adopt early.”

Chinese performance actually the best in 8 quarters

“if you look at the emerging markets, I would tell you that story in Q4 was quite similar to the story in Q3. If we go through the five BRICM countries, Brazil actually was negative 45%. Russia was negative 38%. China was negative 3%, which actually was the best performance we’ve had in eight quarters. And we had some bright spots. India was plus 5%. Mexico was plus 26%, and Mexico had just a tremendous year in general.”

“I think that largely they’re largely macro and geopolitical issues. We have adjusted our cost structure where needed and we’ve invested in areas where we’ve seen growth, as you would expect. “