Liveblogging Cisco's Q3 earnings

4:32pm -- the conference is starting with all the disclaimers and usual jazz.. Here are some Q3 highlights:

• Q3 Net Sales: $8.9 billion (increase of 21% year over year)
• Q3 Net Income: $1.9 billion GAAP; $2.1 billion non-GAAP
• Q3 Earnings Per Share: $0.30 GAAP (increase of 36% year over year); $0.34 non-GAAP (increase of 17% year over year)

4:36pm -- the call is turned over to Chairman and CEO John Chambers, who tells the audience that there will be more n the Q&A on this call and less on the narrative. Analysts love this.

Some highlights of the Q3 period, as John starts to go over the detail of each:

• Cash flows from operations were $2.4 billion for the third quarter of fiscal 2007, compared with $2.3 billion for the third quarter of fiscal 2006, and compared with $2.7 billion for the second quarter of fiscal 2007.
• Cash and cash equivalents and investments were $22.3 billion at the end of the third quarter of fiscal 2007, compared with $17.8 billion at the end of the fourth quarter of fiscal 2006, and compared with $20.7 billion at the end of the second quarter of fiscal 2007.
• During the third quarter of fiscal 2007, Cisco repurchased 56 million shares of common stock at an average price of $26.85 per share for an aggregate purchase price of $1.5 billion. As of April 28, 2007, Cisco had repurchased and retired 2.2 billion shares of Cisco common stock at an average price of $19.20 per share for an aggregate purchase price of approximately $41.7 billion since the inception of the stock repurchase program.
• Days sales outstanding in accounts receivable (DSO) at the end of the third quarter of fiscal 2007 were 33 days, compared with 38 days at the end of the fourth quarter of fiscal 2006, and compared with 31 days at the end of the second quarter of fiscal 2007.
• Inventory turns on a GAAP basis were 8.8 in the third quarter of fiscal 2007, compared with 8.5 in the fourth quarter of fiscal 2006, and compared with 7.8 in the second quarter of fiscal 2007. Non-GAAP inventory turns were 8.6 in the third quarter of fiscal 2007, compared with 8.3 in the fourth quarter of fiscal 2006, and compared with 7.6 in the second quarter of fiscal 2007.

4:40pm -- revenue growth on Scientific Atlanta (now owned by Cisco) was 30% for the Q3 period, as that company is now aligning its quarters with Cisco's quarters.

4:44pm -- Chambers is now going over these areas of Cisco's business (very fast, I may add):

• Acquisitions and Investments
• New Products
• Major Customer Announcements

4:46pm -- Chambers is saying that consumer IP traffic (Internet only, I suppose) will surpass business IP traffic for the first time ever in 2007. Cisco will feed this growth with its varied networking products.

4:50pm -- Chambers is finishing his remarks and is probably about to start the Q&A...he's talking about wikis, podcasts and blogs are driving Web 2.0 traffic, and that Cisco will be in the middle of it.

4:53pm -- Cisco's Q4 guidance now is seen at 15% to 16% at this time, which is at the high end of the guidance Cisco has provided earlier. This is really an excellent figure for the quarter we're now in. Chambers now turns the call over to Cisco's CFO, who starts going over the financial overview for both Cisco and Scientific Atlanta.

4:59pm -- Chambers takes the call back over and starts going over geographics of Cisco's business, while excluding all businesses (like Scientific Atlanta) unless noted. He's talking about the four major "theaters" Cisco System serves. Rarely do I hear a CEO use a war term like "theater" when talking about market areas.

5:04pm -- Chambers is going over India (very impressive growth) and parts of Europe. He's talking about some executive movement in the top of Cisco's ranks to Bangalore, indicating a pretty darn positive momentum towards India for Cisco.

5:08pm -- Chambers is still going and we've only got 20 minutes left for the Q&A. I'm not sure affording more time for questions was a goal that was hit here.

5:11pm -- total revenue for Q4 should be in the $9.2 to $9.3 billion, a 15% growth rate over Q3, with 65% gross margins for the Q4 period as well.

5:16pm -- whew -- we're still not into the Q&A yet. There's 15 minutes left on the call. Suggestion to Cisco: publish all the business perspective and narrative into a small book and get to the Q&A much faster. Biting questions are more important than some canned (albeit important) information that takes away from valuable interaction time.

5:20pm -- here we go (finally) with the Q&A. First question: should the product mix among emerging markets be the same as recent times compared to the U.S. market, ore are there indicators that this mix may change? Chambers answers: the U.S. business is solid right now, although the economies outside the U.S. are growing faster than in the U.S. right now.

5:23pm -- second question: how does the growth in Scientific Atlanta's business break down into specific product segments? Answer: this past quarter was the highest ever for Scientific Atlanta, helped with HD (high definition) shipments seeing explosive growth recently. 32 million STBs (set-top boxes) shipped so far. HD-DVRs are going nuts (high-def digital video recorders).

5:26pm -- next question: how does Cisco plan to move from a 10-15% growth rate in some product segments to the 15-20% level? Chambers answers that he doesn't want to over-guide forecasts, but right now he's staying with the 10-15% growth level as a general rule.

5:29pm -- next question: the TAM (total available market) is increasing as more networking is being included in certain areas that did not have "network connectivity" before -- is Cisco taking advantage of this? Answer: yes, even though core switching products and such are being shipped in record numbers in the U.S. and in international markets. Cisco is a "software company" wrapped up in steel (physical products). That's a very good and telling revelation, right?

5:33pm -- next question: is Cisco seeing any growth in the U.S. enterprise market? Answer from Chambers: growth was flat (lower single digits) for the Q3 period, but U.S. enterprise is only 13% of Cisco's total business globally (so it's important, but not overly significant).

5:36pm -- next question: how is the IPTV market developing (as in, slowly). Is it developing as fast as Cisco needs to feed that industry? Answer: the way this market is growing (slowly) is working very well to Cisco's advantage since a few years ago, Scientific Atlanta was not part of Cisco then. It is now, and the timing is perfect for Cisco as this market develops and Scientific Atlanta is onboard for the expertise and equipment.

5:41pm -- that's it -- Cisco's Q3 period showed excellent growth and the Q4 period looks even better according to Cisco execs. Is Cisco due up for it's second selling revolution based on "Web 2.0" as CEO Chambers suggests? He made that reference to Web 2.0 a few dozen times, so clearly Cisco sees the second birth of the web fueling the company's impressive growth.