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Cisco: Financial AnalysisOct-05Jan-06Apr-06Jul-06Oct-06Jan-07Apr-07Jul-07Oct-07Jan-08Apr-08FY 2006FY 2007FY 2008EFY 2009ECY 2006CY 2007ECY 2008ECY 2009E

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Analysis By:

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Silicon Alley Insider

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$9752.6

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Oct-05Jan-06Apr-06Jul-06Oct-06Jan-07Apr-07Jul-07Oct-07Jan-08Apr-08FY 2006FY 2007FY 2008EFY 2009ECY 2006CY 2007ECY 2008ECY 2009E

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Revenues$6,550$6,628$7,322$7,984$8,184$8,439$8,866$9,433$9,554$9,831$9,791$28,484$34,922$40,370$45,011$30,118$36,292$42,388$47,261

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Y/Y Change24.95%27.32%21.09%18.15%16.74%16.49%10.43%22.60%15.60%11.50%

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Cost of Sales$2,087$2,123$2,511$2,768$2,880$2,973$3,148$3,286$3,288$3,389$3,486$9,489$12,287$13,726$15,304$10282$12,695$14,412$16,069

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Margin31.86%32.03%34.29%34.67%35.19%35.23%35.51%34.84%34.41%34.47%35.60%33.31%35.18%34.00%34.00%34.14%34.98%34.00%34.00%

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Gross Profit$4,463$4,505$4,811$5,216$5,304$5,466$5,718$6,147$6,266$6,442$6,305$18,995$22,635$26,644$29,707$19836$23,597$27,976$31,192

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Margin68.14%67.97%65.71%65.33%64.81%64.77%64.49%65.16%65.59%65.53%64.40%66.69%64.82%66.00%66.00%65.86%65.02%66.00%66.00%

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R&D$859$850$925$980$990$993$1,053$1,085$1,097$1,110$1,439$3,614$4,121$4,441$4,951$3745$4,228$4,663$5,199

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Margin13.11%12.82%12.63%12.27%12.10%11.77%11.88%11.50%11.48%11.29%14.70%12.69%11.80%11.00%11.00%12.43%11.65%11.00%11.00%

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Sales & Marketing$1,320$1,319$1,431$1,508$1,586$1,619$1,722$1,868$1,896$1,970$2,129$5,578$6,795$7,670$9,002$5844$7,105$8,054$9,452

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Margin20.15%19.90%19.54%18.89%19.38%19.18%19.42%19.80%19.85%20.04%21.74%19.58%19.46%19.00%20.00%19.40%19.58%19.00%20.00%

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General & Administrative & Other$242$255$268$284$340$305$350$399$448$466$596$1,049$1,394$1,413$2,251$1147$1,502$1,696$2,363

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Margin3.69%3.85%3.66%3.56%4.15%3.61%3.95%4.23%4.69%4.74%6.09%3.68%3.99%3.50%5.00%3.81%4.14%4.00%5.00%

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Total Operating Expense$2,421$2,424$2,624$2,772$2,916$2,917$3,125$3,352$3,441$3,546$4,164$10,241$12,310$13,524$16,204$10,736$12,835$14,412$17,014

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GAAP Operating Income$1,622$1,731$3,073$1,990$1,991$2,130$2,197$2,303$2,368$8,416$8,621

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Adjusted Op Income (Ex-Stock, etc.)$2,042$2,081$2,187$2,444$2,388$2,549$2,593$2,795$2,825$2,896$2,141$8,754$10,325$13,120$13,953$9,100$10,762$13,564$14,178

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Y/Y Change16.94%22.49%18.56%14.36%18.30%13.61%-17.43%17.95%27.07%6.35%

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Margin (Revenue)31.18%31.40%29.87%30.61%29.18%30.21%29.25%29.63%29.57%29.46%21.87%30.73%29.57%31.00%31.00%30.21%29.65%32.00%30.00%

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Interest & Other Income$137$185$159$156$185$205$222$228$254$234$168$637$840$850$0$685$909$0$0

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Income Before Provision for Income Tax$2,179$2,266$2,346$2,600$2,573$2,754$2,815$3,023$3,079$3,130$2,309$9,391$11,165$13,970$13,953$9,785$11,671$13,564$14,178

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Provision for Income Taxes$610$634$533$728$669$663$704$755$577$751$536$2,505$2,791$3,632$3,628$2,564$2,699$3,527$3,686

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% of EBT27.99%27.98%22.72%28.00%26.00%24.07%25.01%24.98%18.74%23.99%23.21%26.67%25.00%26.00%26.00%26.20%23.13%26.00%26.00%

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GAAP Net Income$1,261$1,375$1,400$1,544$1,608$1,921$1,874$1,930$2,205$5,580$7,333$5,927

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Net Income (Ex-Stock, etc.)$1,569$1,632$1,813$1,872$1,904$2,091$2,111$2,268$2,502$2,379$1,773$6,886$8,374$10,338$10,325$7,221$8972$10,038$10,492

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Y/Y Change21.35%28.13%16.44%21.15%31.41%13.77%-16.01%21.61%23.45%-0.12%

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Margin (Net Revenue)23.95%24.62%24.76%23.45%23.26%24.78%23.81%24.04%26.19%24.20%18.11%24.17%23.98%25.00%25.00%23.98%24.72%23.68%25.00%

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GAAP EPS$0.20$0.22$0.22$0.25$0.26$0.31$0.30$0.31$0.35$0.89$1.18

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Adj. EPS (Ex-Stock)$0.25$0.26$0.29$0.30$0.31$0.33$0.34$0.36$0.40$0.38$0.29$1.10$1.34$1.59$1.55$1.16$1.43$1.57$1.61

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Y/Y Change24.05%27.15%17.52%19.57%29.02%

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Shares Out (Diluted)6,3406,2336,2916,1816,2026,2816,2336,2636,3176,197$6,06962596,3846,5126,6426,2276,2746,3996,527

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Dilution (Y/Y)-2.18%0.77%-0.92%1.33%1.85%-1.34%-2.63%2.00%2.00%2.00%0.75%2.00%2.00%

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REVENUE BY PRODUCT

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Router

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Revenue$1,417$1,420$1,519$1,649$1,595$1,674$1,766$1,885$1,884$1,969$1,890$6,183$7,504$7,729$8,425

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Y/Y Change13%18%16%14%18%18%7%21%3%9%

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% Revenue22%21%21%21%19%20%20%20%20%20%19%24%24%23%23%

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Switch

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Revenue$2,643$2,665$2,691$2,834$3,030$3,013$3,089$3,341$3,280$3,349$3,274$11,220$13,059$13,451$14,392

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Y/Y Change15%13%15%18%8%11%6%16%3%7%

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% Revenue40%40%37%35%37%36%35%35%34%34%33%44%41%40%39%

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Advanced Technology

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Revenue$1,133$1,163$1,529$1,784$1,860$1,930$2,072$2,213$2,359$2,404$2,404$6,336$9,048$10,134$11,856

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Y/Y Change64%66%36%24%27%25%16%43%12%17%

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% Revenue17%18%21%22%23%23%23%23%25%24%25%25%29%30%32%

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Other

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Revenue$298$289$416$467$455$482$554$503$492$523$587$1,627$2,072$2,155$2,263

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Y/Y Change53%67%33%8%8%9%6%27%4%5%

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% Revenue5%4%6%6%6%6%6%5%5%5%6%6%7%6%6%

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Total Product

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Revenue$5,491$5,537$6,155$6,734$6,940$7,099$7,481$7,942$8,015$8,245$8,155$25,366$31,683$33,469$36,936

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Y/Y Change26%28%22%18%15%16%9%25%6%10%

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% Revenue84%84%84%84%85%84%84%84%84%84%83%89%91%83%82%

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Total Service

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Revenue$1,059$1,091$1,167$1,250$1,244$1,340$1,385$1,491$1,539$1,586$1,607$4,752$6,001$6,901$8,074

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Y/Y Change17%23%19%19%24%18%16%26%15%17%

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% Revenue16%16%16%16%15%16%16%16%16%16%16%17%17%17%18%

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Revenue Breakdown by Region

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United States & Canada$3,652$3,468$4,138$4,527$4,689$4,556$4,843$5,206$5,499

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Y/Y Change28%31%17%15%17%

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% of Total Revenue56%52%57%57%57%54%55%55%58%

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Europe$1,368$1,533$1,595$1,583$1,628$1,841$1,966$1,900$1,906

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Y/Y Change19%20%23%20%17%

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% of Total Revenue21%23%22%20%20%22%22%20%20%

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Emerging Markets$536$620$604$716$728$890$839$1,020$867

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Y/Y Change36%44%39%42%19%

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% of Total Revenue8%9%8%9%9%11%9%11%9%

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Asia Pacific$635$720$648$850$787$847$900$1,017$977

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Y/Y Change24%18%39%20%24%

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% of Total Revenue10%11%9%11%10%10%10%11%10%

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Japan$359$287$337$308$352$305$318$320$305

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Y/Y Change-2%6%-6%4%-13%

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% of Total Revenue5%4%5%4%4%4%4%3%3%

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CASH FLOW

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Cash Flow From Operations$1,402$1,865$2,315$2,317$2,271$2,658$2,437$2,738$3,089

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Y/Y Change62%43%5%18%36%

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% of Total21%28%32%29%28%31%27%29%32%

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Capital Expenditures$215$179$201$177$214$334$364$339$296

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Y/Y Change0%87%81%92%38%

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% of Revenue3%3%3%2%3%4%4%4%3%

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FREE CASH FLOW$1,187$1,686$2,114$2,140$2,057$2,324$2,073$2,399$2,793

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Y/Y Change73%38%-2%12%36%

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Margin18%25%29%27%25%28%23%25%29%

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BALANCE SHEET

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Cash, Equivalents + Marketable Secs.$1,704$5,151$4,237$3,297$4,313$2,434$5,457$3,728$4,413$5,202

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Inventory$1,318$1,345$1,313$1,371$1,477$1,642$1,289$1,322$1,315$1,267

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Y/Y Change12%22%-2%-4%-11%-23%

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% of Revenue20%20%18%17%18%19%15%14%14%13%

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Debt (Current + Long-Term)$0$0$6,346$6,332$6,455$6,416$6,478$6,408$6,582$6,851

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VALUATION

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Price$23.81

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Shares Outstanding (Diluted)6,317

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MARKET CAPITALIZATION$150,408

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Market Capitalization

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+ Debt$6,582

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- Cash$4,413

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ENTERPRISE VALUE$152,577

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VALUATION RATIOS

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P/E:EPSP/E

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CY 2007E$1.4317x

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CY 2008E$1.5715x

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CY 2009E$1.6115x

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