Cisco Quarterly Results Impress Wall St. but Not this Security Analyst

Cisco announced its financial results today, must to the delight of Wall Street. Cisco revenue beat estimates and posted 8% year-over-year growth. Net income rose 26% over last year. These stellar results prompted Cisco CEO John Chambers to declare, "we are hitting on all cylinders." No doubt, these are impressive results but there is some hidden bad news in all of the confetti and champagne -- year over year security revenue was flat. Hmm, I guess one of those cylinders has a little carbon build up after all. While Cisco security revenue flat-lined other security vendors prospered. Check Point grew revenue by 25% in Q4 2009. Juniper Networks revenue beat Wall Street estimates as did Symantec. Back in October, McAfee announced its biggest financial quarter ever with 8% revenue and 26% net income growth. Okay so if other security vendors are growing, why isn't Cisco? Because: 1. Cisco is taking its eye off the ball. Let's face it, security just isn't as important to Cisco anymore as UCS or Telepresence. The old campaigns around "self-defending networks" are no match for big dollar cloud computing and virtualization schtick. 2. Sales people chasing multi-million dollar deals have no time for two-bit security sales. Why trip over the dollars to pick up the pennies? 3. Cisco is walking away from many security battles. In 2009 Cisco canned its Cisco Security Agent (CSA) and put Cisco Monitoring Analysis and Response System (MARS) on maintenance. Cisco's firewall business is a shell of what it was a few years ago and it really doesn't have a high-end UTM product to compete with the likes of the Juniper SRX or Crossbeam. What's going on? Beats me. Cisco used to give away a lot of security stuff to win bigger dollar networking deals. This strategy along with IronPort sales seem to be the only things keeping the security ship afloat. From a Wall Street perspective, who cares? If Cisco revenue and earnings shine, share prices go up and everyone gets rich. True, but Cisco seems to be willing to shed information security sales for greener pastures. If this is the case, enterprise customers should plan accordingly by assessing their Cisco security portfolio and crafting a "plan B" replacement strategy as a hedge.