Padmasree Warrior is leading Cisco's sequentially declining security and switch sales

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Padmasree Warrior is leading Cisco's sequentially declining security and switch sales
Sun, 11/14/10 - 7:37pm View comments

On a sequential basis, Cisco's sales are in decline with the culprits fingered as security, switches and video connected home sales.

Furthermore, perhaps the biggest giveaway that Cisco has lost sequential sales momentum has been the reorganization of its product sales reporting as shown below:

Cisco's previous vs. new product sales reporting matrix

Source: Cisco Systems

Sequentially, Cisco's total sales declined by -$86 million with new product sales declining the most -$132 million followed by switch sales which declined -$57 million (the 2nd sequential switch sales decline in a row for a total decline of -$110 million).

Additionally, when breaking down Cisco's new product sequential sales decline of -$132 million, the culprits fingered turned out to be security sales declining by -$131 million followed by video connected home sales which declined by -$95 million (the 3rd sequential video connected home sales decline in a row for a total decline of -$153 million), see below.

Cisco's sequential sales decline (highlighted in yellow)

Cisco's Sales In millions	Q1'FY10	Q2'FY10	Q3'FY10	Q4'FY10	Q1'FY11
Routers	$1,600	$1,586	$1,714	$1,731	$1,804
Switches	2,851	3,409	3,661	3,608	3,551
New Products	2,545	2,784	2,837	3,246	3,114
Other	204	197	224	223	231
Services	1,821	1,839	1,932	2,028	2,050
TOTAL	$9,021	$9,815	$10,368	$10,836	$10,750

Cisco's New Product Sales In millions	Q1'FY10	Q2'FY10	Q3'FY10	Q4'FY10	Q1'FY11
Video Connected Home	$901	$1,153	$1,115	$1,095	$1,000
Collaboration	703	715	752	993	1,019
Security	403	394	405	526	395
Wireless	310	254	271	307	338
Data Center	228	268	294	325	362
TOTAL	$2,545	$2,784	$2,837	$3,246	$3,114

Source: Cisco Systems

Needless to say, but I'll say it anyway, Cisco shareholders have no need to worry as Cisco CEO John Chambers eloquently explained the sequentially declining security sales during Cisco's Q1'FY11 earnings call:

"Security is an area that we want to improve on. I'm very comfortable with what Padma and Brett are doing in the security architecture. We spent a lot of time over the last couple of quarters in terms of that direction and security is setup for an architectural play. It has to tie to routing and switching the data center and the server type capability."

Readers may recall that at her previous employer, Chamber's heir apparent and new Security Czar, Padmasree Warrior, led Motorola as its Chief Technology Officer to a sales decline of more than -$4 billion while simultaneously Motorola's operating earnings collapsed by -$3.8 billion to a loss of -$534 million (page 1).

As far as Cisco's sequentially declining switch sales momentum, again there's no need for Cisco shareholders to worry as Cisco's new Senior Vice President and General Manager, Enterprise, Commercial and Small Business, Padmasree Warrior, is leading the way and once more as eloquently explained by John Chambers during Cisco's Q1'FY11 earnings call:

"In terms of switching, might there be a quarter or two where numbers go up or down slightly, we do very well. In terms of some of our competitors and installed accounts when we start to win, saying I'll give you the product for free, so you're seeing some aggressive moves from some of them, you are seeing that in terms of direction. Our win rate is very good. You go into the data center, we are literally knocking off one source right after another, and we are knocking off enterprise account after enterprise account to already be at 40 that are million dollars plus in run rates there, feels very good."

What's your take, do you agree with me that Cisco shareholders have no need to worry now that Padmasree Warrior is leading Cisco's sequentially declining security and switch sales?