RE: Are Dark Clouds Gathering Over Cisco?

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From: Ian Andrew Bell (
Date: Sun Sep 17 2000 - 01:51:44 PDT

Sold at 68, baby.

"Realized their peak" to me means top value per share. But those are
pretty bold and strong words. If you soften them and assume that "realized
their peak" refers to growth and not absolute value, then you're still
talking some very inhibiting factors for Cisco's business practises.

My only point is that the foundation of everything that has made Cisco
successful is the potential for the extraction of unrealized value down the

Take away that potential, and/or spread a meme which solidly criticizes
that potential, and the whole thing (in Cisco's case in particular) will
start to unravel. Why? You're taking away the prime incentive of
employees, and you're taking away the ability to easily and cheaply acquire
new products, market share, and people thru acquisition.


At 04:53 AM 17/09/00 -0400, Mark Day wrote:
>[...] there's a growing
> > feeling in the media that Cisco may have realized their peak.
>"May have realized their peak" is one of those media phrases that dissolves
>when you try to analyze it carefully. It could mean any of several different
>things: e.g.
>1. Cisco's price is headed down.
>2. Cisco's price will stay flat.
>3. Cisco's price will double, but it will take longer than in the past.
>These are pretty different views of the future. Which is closer to what you
>expect - down, flat, or slower rise? The analyst report concludes that it
>won't continue its "meteoric rise of the past 5 years" -- well, duh. People
>get paid to reach *that* conclusion? That doesn't really give you much
>guidance about whether Cisco might still be better than alternatives in
>terms of risk vs. return.
> > IMHO,
> > analysts and reporters sitting on CNBC predicting poor stock performance
> > tends to be a self-fulfilling prophecy.
>In the short term, yes, especially for a stock as widely held as Cisco. But
>keep in mind that analysts and press have a vested interest in exaggerating
>the size of the changes. At Lotus, it was pretty weird to watch the
>oscillation between "Lotus is dead" and "Lotus is back" stories over a few
>years. My experience from the inside was not that we were having crushing
>defeats and dramatic turnarounds but more just the usual day-to-day muddling
>through problems and solutions in a fairly large organization. I'd say,
>based on the volume of adulation about Cisco, the company's way overdue for
>a long string of savaging, followed by some "it's not so bad after all"
>Speaking of vested interests, readers will note that I am a current Cisco
>employee and shareholder. For anyone who doesn't know, Ian is a former Cisco
>employee. He'll have to tell us if he's a current shareholder, or perhaps a
>short-seller. ;-)
> > Everything significant about Cisco is driven by continued growth in the
> > stock price: employee retention, realization of value after acquisition,
> > and the power to form major alliances.
> > If that curve is gone then there will be chaos as employees (notoriously
> > underpaid and overworked, even by Silicon Valley standards) drive over
> > other to leave the parking lot.
>The critical question to ask is what the alternatives are. When compared to
>many companies in the internet space that have cratered to a few percent of
>their high, Cisco's recently flat stock price looks heroic. As acquisition
>currency, the crucial comparison is probably to Nortel and Lucent, (maybe
>Inktomi) and those stocks have their detractors as well.


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