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Cisco Reports August 27, 2013

Posted by shaferfinancial in Uncategorized.
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One of my newest acquisitions is Cisco Systems (CSCO).  It it the smallest percentage of my portfolio.  What attracted me to the stock was the free cash flow, the amount of cash on hand, the increasing revenue growth, and the potential for significant dividend increases over the next few years.

The latest quarter has produced earnings up 11% over the 4th quarter of last year.  Total revenue growth was 6%, so the company was more efficient dealing with that growth.  The company made $4B in cash and returned about half of that to shareholders by both dividends and stock buy backs.

The business continues to be a market leader in switches and saw a dramatic increase in cloud data revenue.  They have purchased several companies which give them the technology to move into the cloud space.  Emerging market business improved 8%, but there is considerable weakness in Asia.  They are laying off 4000 people as they change their business structure with the fast moving market.

So, in short Cisco had a excellent quarter, continuing to create free cash flow, acquiring strategic companies, moving into future technology areas and making profit.

I bought this company in May at $20.83 and it now sits at $23.83 an increase of 14%.

The dividend was not raised this quarter.  But with those results I think it will be raised soon.  Stock buy backs continue which will increase the value of my shares and should increase the dividends further.

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