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Cisco's gross margin, router and switch sales are under siege
Wed, 11/10/10 - 10:02pm    View comments

Almost 2 months ago I blogged that Cisco's FY'10 router sales were down a whopping -$1.366 billion from FY'08.

Well today, Cisco released its Q1 FY'11 financial results and they're none too pretty (at least in my personal opinion). View Cisco's Q1 FY'11 earnings call transcript.

How so you may ask?

First, Cisco's Q1 FY'11 gross margin, (the difference between sales and production costs), was a mere 62.8%, which alarmingly missed Wall Street's expectation of 64%.

Cisco's Q1 FY'11 vs. Q1 FY'10 gross margin results

Source: Cisco Systems

Cisco's geographic Q1 FY'11 vs. Q1 FY'10 gross margin results

Source: Cisco Systems

Secondly as shown below, Cisco's Q1 FY'11 router sales were down -$95 million from Q1 FY'08 (see page 48).

Furthermore as shown below, Cisco's Q1 FY'11 switch sales were down -$80 million from Q1 FY'08 (also see page 48).

Cisco's Q1 FY'11 router and switch revenue

Source: Cisco Systems

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What's your take, do you agree with me that Cisco's gross margin, router and switch sales are under siege?

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