Cisco’s Chambers: Do Ya Think I’m Sexy?

After hitting a one-year high yesterday on the unveiling of its new router, the portentously named CRS-3 (wasn’t that a cyborg in a James Cameron movie?), Cisco's (CSCO) share price slipped about 1 percent today. That has to do with broader market fluctuations and the fact that Wall Street had already “priced in” the new router, but it’s also true that the actual announcement did not live up to Cisco’s hype about a product that would “revolutionize the Internet.”

Today’s slide, however, shouldn’t obscure the fact that, from its depths in early 2009, Cisco’s stock has roughly doubled in the last 12 months. Ari Weinberg, of The Wall Street Journal, takes us on a journey through the past to the dot-com days of March 2000, when the stock peaked at $82 a share and for a brief moment “Cisco was actually the most valuable company in the world.”

Those days seem as distant now as the Jimi Hendrix Experience, and considering that Hendrix, 40 years in the grave, just put out a new album, it’s appropriate that Cisco is also attempting to approximate its glory days. I’ve been covering Cisco and its CEO John Chambers since those days (I was among the first tech journalists to scoff at his repeated assertions that Cisco revenues would continue to grow at roughly 35 percent, in perpetuity), and the company has always had a somewhat tangled relationship with Wall Street. As Chambers, in a rare moment of candor, admitted on Monday’s conference call, Cisco at its heart is a plumber, and investors in general don’t like plumbers; they like makers of shiny, new, high-margin kitchenware. In a sense Chambers’ mission for the last decade or so has been to convince Wall Street that plumbing is sexy. And high-growth.

Thus all his talk about “market transitions,” “the next-generation Internet,” “new services and new business models,” and so on. Chambers yesterday predicted (as he has several times over the last few years) a new era of productivity growth that will see companies growing at more than 10 percent a year and national economies at up to 5 percent a year.

I’m not necessarily betting against him – Cisco’s earnings, after all, grew at nearly a 25 percent clip in its latest quarterly report – but there has always been something of the street-corner preacher in Chambers’ drawling, effusive depictions of the glorious new era that will be based on Cisco hardware and that is forever just around the next corner.

From this perspective the CRS-3 super-router – capable of downloading every movie ever made in four minutes, not to mention roasting a mean pig – is not really something to get all that excited about. As my former colleague Scott Raynovich pointed out on Seeking Alpha, 100G core routing is an area in which Cisco actually trailed its main competitors, and “The product does not ship until the third quarter of this year, so trading the stock based on this news is somewhat silly.”

These days more than ever, Wall Street longs for a proven winner, and Cisco continues to pump out products that it claims will change the world. Still, commented Michael Copeland on Fortune’s Brainstormtech blog, “Cisco, no matter how hard they try, has never been sexy, and today’s news didn’t change that.”