Cisco 2013 Annual Report Download - page 3

Cisco Systems, Inc. 1
Annual Report 2013
Letter to Shareholders
To Our Shareholders,
Fiscal 2013 was another strong year for Cisco, and we
were pleased to have delivered record results despite
a challenging and inconsistent global macroeconomic
environment. Our results underscored the eectiveness
of our vision and strategy and our strong execution. We
consistently delivered on the commitments we made—
to our customers, partners, employees, and you, our
shareholders.
By utilizing decades of networking investments, coupled
with the breadth of our portfolio, we are providing our
customers with an integrated architectural approach that
solves their critical business requirements. This unique
approach brings together application-specic integrated
circuits (ASICs), software, hardware, and services, which
we believe are key to our customers’ success now and
into the future. In our view, we are the only company in
the industry that can deliver on this integrated architectural
approach.
Our momentum reects the fundamental role the network
is playing in the key technology transitions in the market,
including software, silicon, cloud, mobility, bring your own
device (BYOD), security, and the Internet of Everything
(IoE). We believe we are well positioned as the pace of
these transitions increases, because we have accelerated
our own speed of innovation to stay ahead of these
transitions and help our customers capitalize on them to
meet their business goals.
An example of this is our continued success in the data
center, where, more than seven years ago, we recognized
the eect developments in data center technology and
the role of cloud computing would have on networking,
and the opportunity to bring innovation to this category.
We have been successful in driving the transition to
a converged architecture, and consequently our Data
Center product category has grown to $2 billion in
revenue over the past ve years and increased 60%
compared with scal 2012. Another example is in mobility,
where we are leading the transition to a unied access
architecture and cloud, and where our Wireless product
category grew 31% in revenue from the prior year.
Fiscal 2013 was marked by a challenging and inconsistent
global economy, the emergence of new technologies
and business models, and industry consolidation. These
factors yielded both headwinds and tailwinds for Cisco’s
business, and we believe our ability to consistently
navigate through dynamic environments has continued to
make us uniquely positioned in the industry. We remain
focused on prioritizing and simplifying our business
operations to both drive Cisco’s continued market
leadership and accelerate through these industry changes
rapidly and with optimal exibility. We realize that we must
rebalance our resources to invest in new opportunities as
we remain focused on protable growth. By managing our
overall business as a portfolio—across geographic regions,
customer markets, and technologies—we continue, in our
view, to increase our strategic position in the market and
deliver on our commitments to shareholders.
As we turn our attention to the future, we see
opportunities to continue to drive protable growth.
These include cloud and the unied data center, the
mobility market transition, and next-generation video. We
are investing for growth in services, security, emerging
markets, and software oerings. And we will continue to
move into new markets that provide recurring revenue
streams. Longer term, we intend to focus on IoE. We
believe that by bringing “everything” online, IoE will create
signicant opportunities for organizations, communities,
and countries to obtain greater value from networked
connections.
FINANCIAL HIGHLIGHTS
For the full scal 2013 and for each quarter of the year,
we grew prots faster than revenue. We eectively
managed our business with strong operational execution
and delivered protable growth and return for our
shareholders. This disciplined nancial approach resulted
in record results from a revenue, net income, earnings per
share (EPS), and operating cash ow perspective. More
broadly speaking, in scal 2013 we outperformed the
majority of our technology peers, especially the large IT
players, from a revenue growth perspective.
For scal 2013, revenue was $48.6 billion, an increase of
6% compared with scal 2012. Product revenue in scal
2013 was $38.0 billion, an increase of 5% from the prior
scal year. Net income was $10.0 billion, up 24% from