Cisco Systems, Inc. (NASDAQ:CSCO)’s delivered an earnings beat for the fourth quarter of fiscal year 2014, giving the stock a small initial boost in after hours trading. While Cisco was up more than 1% shortly after it released its quarterly earnings, sentiment quickly changed direction and the stock is currently down by just as much.

Cisco Systems, Inc. Earnings Fall YoY, Still Beats Expectations

Revenues fell from $12.42 billion in 4Q13 to $12.36 billion this year versus a consensus of $12.15 billion, while Cisco’s pro-forma EPS hit $0.55 this quarter, an improvement over last year’s $0.52 and beating the consensus $0.55.

“We are executing well in a tough environment and delivered our best non-GAAP earnings per share quarter in our history,” said Cisco Systems, Inc. (NASDAQ:CSCO) CEO John Chambers. “Our strategy is sound, our financials are strong, and our market leadership is secure.”

Full-year gross margins fall despite stable operating expenses

Cisco Systems, Inc.’s (NASDAQ:CSCO) full year 2014FY revenue fell 3% year-on-year to $47.1 billion, non-GAAP EPS for 2014FY was $2.06 and GAAP EPS was $1.49. Gross margins for the year fell from $29.44 billion in 2013FY to $27.78 billion in 2014FY as operating expenses remained stable but operating income dropped off.

GAAP income fell, but EPS increased because of buybacks

GAAP income fell from $2.3 billion to $2.2 billion year-on-year, but this was still an EPS increase from $0.42 in 4Q13 to $0.43 this year thanks to its large stock buyback program. Cisco reported that it returned a record $13.3 billion to shareholders over the last fiscal year in the form of $0.72 in dividends ($0.19 last quarter) and $9.5 billion in buybacks ($1.5 billion last quarter).

Cisco Systems, Inc. (NASDAQ:CSCO) Net income from operating activities fell from $9.98 billion to $7.85 billion year on year, and net cash provided by operating activities fell slightly from $12.89 billion to $12.33 billion. Cash and cash equivalents fell from $7.93 billion to $6.73 billion over the same period, while free cash flow fell from $3.67 billion in 4Q13FY to $3.29 billion last quarter but that was also an increase from $2.83 billion in 3Q14FY.