Tough questions, Tom, and we've been debating them here and on the G&K thread for months without reaching a consensus. That shouldn't be surprising, since the Gorilla Game is a theory and only offers subjective metrics. Here's my personal view, but I caution you in advance that I am a perma-bull by nature. All IMHO:
>> But how can you tell if CSCOs market cap has gotten too far ahead of itself due to the internet mania (which is in the process of correction).
The internet mania was about obscene valuations for companies that use the internet, not those who build it. Many if not most of the b:c internutz were born and will die without ever turning a profit. But use of the internet continues to grow at an astonishing rate, and IBM recently opined that the buildout is only at 3%! Infrastructure companies will continue to face a fertile market and have a difficult time keeping up with demand, and make huge profits in the process.
>> And how do you tell if the gorilla has gotten so large and all that is left is declining growth rates (and stock underperformance) due to its size?
That's the law of large numbers again, which is logical but has proven pretty useless for predicting the growth rates of individual companies. GGing advises to hang on to the Gorilla until they are threatened by a discontinuous innovation. Many feel the optical network represents that threat, and should Cisco not show progress, I will have to re-examine my position.
>> Finally, how serious are the concerns about accounting sleight-of-hand, etc.
It makes good copy for the quarterly Barrons' attack, but I see it as peripheral to the issues which will determine Cisco's success.
Cisco's earnings reports are always exciting, Tom. A one penny earnings surprise is a given (isn't that amazing?). Top line growth and progress in photonics are where my attention will be focused.
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