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.

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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.