customer preso - Financing and what Cisco can do · Microsoft PowerPoint - customer preso -...

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Transcript of customer preso - Financing and what Cisco can do · Microsoft PowerPoint - customer preso -...

Financial Modellingand what Cisco can do?

Vaso Januzovic, March 2010

What for?

ItIt´́s all about s all about

PROFIT & PROFITABLE GROWTHPROFIT & PROFITABLE GROWTH

- reduce discount level- new market adjacancies- new services - have a plan- demand creation- meet cust expectations

- value selling- smart packaging- use programs to control the discount- efficiency in manufacturing and services

- is it business critical?- what is the ROI- TCO on IT equipment- have a plan- build efficiencies

What is the plan?

Remember the good old days when • productivity rose steadily,• employment was high, • prices were stable, and • return on corporate assets went down, down,

down?

Deloitte study of over 20,000 publicly traded American firms found that between 1965 - 2008• average return on assets (ROA) declined about 75%• increase in competitive intensity• rapid loss of competitive advantage• leading companies stumble much more frequently

Another study• international review of 1,854 large public companies• between 1988 and 1998 • 87% did not earn back their cost of capital

Strong link between market culture & performance

Source: market culture by Sean M. Gallagher, Christopher L. Brown, and Linden R. Brown, Ph.D.

Market culture describes how “in touch” and aligned an organization is with its environment.

Market culture elements linked to performance metrics

Source: market culture by Sean M. Gallagher, Christopher L. Brown, and Linden R. Brown, Ph.D.

What is Cisco´s stake in this

game?

Cisco Capital enables and builds

capacity

Proposal

� Why Pay Now?

� Deployment + Implementation + Useful Life = Payments.

� Use Cisco’s cash not yours.

� Acquire any Cisco technology, minimum of 70% Cisco products in the total solution.

� Short and medium term payment deferrals with grace periods.

� Products: Extended Payments

PaymentsPayments

20201010PaymentsPayments

20120111PaymentsPayments

20120122

Extended Payment TermsExtended Payment Terms$17,549,06$17,549,06

44$17,549,064$17,549,064 $17,549,064$17,549,064

Total Cash OutlayTotal Cash Outlay$17,549,06$17,549,06

44$35,098,128$35,098,128 $52,647,192$52,647,192

Weighted Average Cost of Weighted Average Cost of

Capital (WACC)Capital (WACC)11%11%

3 year 3 year

InvestmentInvestment3 year NPV 3 year NPV

InvestmentInvestment

Cash FlowCash Flow $52,647,192$52,647,192 $47,602,246$47,602,246

AmountAmount USD 50millionUSD 50million

TenorTenor 36 Months36 Months

Grace PeriodGrace Period 180 days180 days

Interest RateInterest Rate 2.97% P.A.2.97% P.A.

RepaymentRepaymentSix SemiSix Semi--annual annual

RepaymentsRepayments

Savings USD5,044,946 or 10% of Net PriceSavings USD5,044,946 or 10% of Net PriceSavings USD5,044,946 or 10% of Net Price

NPV SavingsNPV Savings TermsTerms

Actual Case