State of the Web: Cisco Is the Backbone of Communications
By James J. Cramer
Originally posted at 6:36 PM ET 7/3/00 on RealMoney.com
If you spend a few days at Cisco (CSCO:Nasdaq - news), as Matt Jacobs and I did earlier in the week, you come back knowing one thing: the Net is huge, beyond comprehension, and every bit as big as when we first heard it bandied about as being important. The Web is the way data will be moving, and moving data is about the biggest growth industry out there, with the possible exception of storing data.
Nearly every exec we met with, and we met with quite a few, showed us not only the relevance of the Web but the incredible way that it has become part of the fiber in every major industry. I felt gratified that those of us in the market everyday didn't misjudge the importance of the industry. Until I came back from Cisco, I think I was beginning to believe that the Net wouldn't be as big as cellular phones became. That's wrong. It is bigger already.
Earlier this week in a chat I wrote that Cisco is the best way to play the growth in wireless, wireline, digital subscriber line (DSL), cable modem and fixed wireless because the backend and the data movement, gets run through Cisco machines pretty much everywhere. It truly is the backbone of the telco system. But it also is the backbone of the Internet. I felt badly when someone emailed me after the chat and said "We know about Cisco, we want something new." I felt badly because the reader just doesn't understand how Cisco has reinvented itself as the important behind-the-scenes player in the Web.
I can't craft some new story about some new stock when the best one I own is Cisco. I can't foment interest in another stock just because Cisco has become boring or old hat.
The amazing thing about the importance of the Net for a corporation is how many hundreds of millions of dollars Cisco has saved by being the most Web-enabled company in the universe. Everyone thinks "Net" at Cisco, everyone, from John Chambers to the receptionists when you walk in. They are 100% wired and I think that much of their new business comes from old line businesses simply saying "show us how it is done."
Oh yeah, one other thing I came back with, a total sense of the irrelevance of the dot-coms to Cisco's earnings. The brief flowering and the tremendous fall of the 300 or so public companies in the space won't mean jack for Cisco. They aren't even part of the fabric. Next time someone starts shorting Cisco because of problems at Amazon (AMZN:Nasdaq - news) or Planet RX (PLRX:Nasdaq - news) I say, let me in, I want the other side of that trade!! |
