⚠ Retained Earnings of $1.6 BillionLow threat

Cisco Systems (CSCO) — threat to the moat

Cisco has only $1.6 billion of retained earnings left after decades of paying out almost every dollar it made.

Cisco has given back nearly everything it ever kept. Retained earnings were only $1,565 million at the end of fiscal 20261, for a company that earned $13,267 million in that year alone2. Buybacks and dividends have consumed the accumulated profit.

Buybacks by fiscal year ($M)17,661FY1820,577FY192,619FY202,902FY217,734FY224,271FY235,764FY245,995FY256,106FY26Cisco Forms 10-K FY2020, FY2023 and FY2026
$73.6 billion in nine years.

Total equity was $50,285 million3, almost none of it retained profit. Return on equity was 27.32% in fiscal 20264, flattered by the small equity base.

This is not a sign of weakness; it is a choice to hold little capital in the business. The cost is that Cisco has no retained cushion for a bad year and must borrow for acquisitions, as it did for Splunk.

The balance sheet has been shrunk deliberately. Total assets were $129,818 million at the end of fiscal 2017 and $94,853 million at the end of fiscal 20205, as cash was returned; total debt fell from $33,717 million to $14,583 million over the same years6. Splunk reversed both: total assets were $129,637 million in fiscal 20267.

The sign to watch is equity turning down while debt rises. If buybacks drive equity below $45 billion while net debt climbs, the balance sheet will be carrying the returns.

References
  1. ReportedRetained earnings were only $1,565 million at the end of fiscal 2026, for a company that earned $13,267 million in that year alone.
    Cisco Systems Form 10-K for fiscal 2026 (year ended 25 July 2026) - capital returns, share count, debt and equity. — FY2026 · publ. 2 September 2026 · source ↗
  2. ReportedRetained earnings were only $1,565 million at the end of fiscal 2026, for a company that earned $13,267 million in that year alone.
    Cisco Systems Form 10-K for fiscal 2026 (year ended 25 July 2026) - capital returns, share count, debt and equity. — FY2026 · publ. 2 September 2026 · source ↗
  3. ReportedTotal equity was $50,285 million, almost none of it retained profit.
    Cisco Systems Form 10-K for fiscal 2026 (year ended 25 July 2026) - capital returns, share count, debt and equity. — FY2026 · publ. 2 September 2026 · source ↗
  4. ReportedReturn on equity was 27.32% in fiscal 2026, flattered by the small equity base.
    Cisco fiscal-year-end ratios - market cap, P/E and P/S at each July year end, fiscal 2022-2026, and net debt to equity. — FY2022-FY2026 · publ. September 2026 · source ↗
  5. ReportedTotal assets were $129,818 million at the end of fiscal 2017 and $94,853 million at the end of fiscal 2020, as cash was returned; total debt fell from $33,717 million to $14,583 million over the same years.
    Cisco Systems Form 10-K for fiscal 2020 - five-year selected data for fiscal 2016-2020, the $10.4 billion Tax Act charge and buybacks. — FY2020 · publ. September 2020 · source ↗
  6. ReportedTotal assets were $129,818 million at the end of fiscal 2017 and $94,853 million at the end of fiscal 2020, as cash was returned; total debt fell from $33,717 million to $14,583 million over the same years.
    Cisco Systems Form 10-K for fiscal 2020 - five-year selected data for fiscal 2016-2020, the $10.4 billion Tax Act charge and buybacks. — FY2020 · publ. September 2020 · source ↗
  7. ReportedSplunk reversed both: total assets were $129,637 million in fiscal 2026.
    Cisco Systems Form 10-K for fiscal 2026 (year ended 25 July 2026) - financial statements and notes: balance sheet, cash flow, commitments, customers and acquisitions. — FY2026 · publ. 2 September 2026 · source ↗
Sources
Generated September 25, 2026