Way back at the turn of the century Cisco had a market cap of $579 billion. Today it's closer to $109 billion.
What happened? BubbleBustInvesting offered four good reasons here last year. The question for investors today is whether the good times might be coming back with Cisco's announcements about merging mobile networks with WiFi and creating what long-time CEO John Chambers calls "the mobile cloud."
Well, the stuff is cool. The Wi-Fi Alliance and Wireless Broadband Alliance have been working on cell-to-Wi-Fi roaming for a year, largely at the behest of big customers such as hospitals that want to move fat files securely.
Now Cisco is rolling these solutions out to its carrier customers. Carriers see Wi-Fi as the best way, in the near term, to offload mobile traffic, moving it seamlessly into the wired Internet from hotspots instead of having to carry it on their own infrastructure. Cisco had 52% of the mobile Wi-Fi market last year, according to the Dell'Oro Group.
The problem for CSCO investors is that the company continues to get squeezed on two sides, by innovators who it can't easily buy on the fat end of margins, and by Chinese competitors on the thin end. Unfortunately that's not going to change because of the latest announcements.
A start-up called Nicira is already out with software called OpenFlow that virtualizes network routing, basically doing to Cisco what cloud did to high-end server companies like H-P and Sun a decade ago.
So what to technologists is a great day a-dawning may prove to be a head-fake for Cisco investors. Buying the stock here would be like buying Sun or HP as the cloud boom was starting. Not a good idea.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.