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If Cisco(CSCO) once showed how easy it was to pick stocks, now it's showing how tough a job that really is.

The networking titan posted fiscal first-quarter earnings that topped analysts' expectations on Monday night, but it was cheered by a shrinking fan club in the fund world. And though Monday's numbers were slightly better than expected, they aren't going to extricate Cisco from the tight spot it and many other former tech highfliers find themselves in.

The rock-and-a-hard place story is that Cisco isn't growing fast enough to suit some growth managers' tastes, and it isn't cheap enough to interest most value managers. In fact, both growth and value managers were selling the stock this year through Sept. 30, just prior to its recent bounce.

"Cisco's fundamentals weakened so fast that managers across the board are wary of it," says Russ Kinnel, director of fund analysis at Chicago-based Morningstar.

In the fund world, most managers are in either the growth or the value camp. Both buy a stock because they think its price will rise, but the former are typically more concerned with a company's earnings growth than its price tag, and vice versa. Yet each discipline's practitioners have backed away from Cisco this year.

On Jan. 1, more than 80% of large-cap growth funds owned Cisco, even though corporate demand for tech products and the broader economy was sagging. Some 22% of large-cap value funds owned the stock, too. But at the end of the third quarter, those figures fell to 69% and 19%, respectively, implying that growth believers and bargain-hunters alike didn't see a reason to pull the trigger.

Backing Down Between last year's third quarter and this year's, growth and value funds stepped away from the Cisco buffet
	Sept. 30, 2000	Sept. 30, 2001
Large-Cap Growth Funds Owning Cisco	84%	69%
Large-Cap Value Funds Owning Cisco	24	19
Cisco Stock Price	$55.25	$12.18
Source: Morningstar.

Growth managers' selling might be expected, given the stock's 70% plummet over the past year. But it's a dramatic about-face from just last year. For many, Cisco had become a "must-own" stock. The company's profits were boosted by a wave of orders from upstart dot-com and telecom shops flush with cash from Wall Street. The company's shares followed a 150% gain in 1998 with an eye-popping 131% pop the next year. Aggressive funds loved the company's growth, and some price-conscious funds saw it as a way to play the dot-com boom and keep up with their peers, without betting the farm on profitless concerns with fresh-faced chief execs.

But then the company's customers and orders popped along with the Nasdaq bubble. That has clearly soured some growthy shops. In the first six months of this year, growth-specialist Janus dropped its Cisco share balance from 183 million to 40 million, according to lionshares.com, a Web site that tracks institutional stock ownership. Over the same stretch, Fidelity slashed its Cisco stake from 321 million to 196 million.

Even a Cisco believer in the growth crowd keeps his praise faint over the near term.

"I think Cisco is pretty fairly valued at around $18," says Howard Ward, manager of the (GABGX)Gabelli Growth fund. "It's not going to run away from you over the next six months, but I think you should own it. I think it could be double or triple where it is in a few years."

A Rough Year Even with its recent run-up, Cisco is down 70% over the past year

Source: Morningstar

And you can hardly blame a value investor for not thinking there are cheaper investments under the sun. At Friday's close, the stock traded at about 109 times its estimated earnings over the next 12 months, compared with 24 for the S&P 500, according to Thomson Financial/Baseline.

Even as Cisco was moving up last month, Robert Sanborn, the Chicago-based manager of the value-oriented Elkhorn hedge fund, told us why he wasn't interested in Cisco.

"I look at Cisco and I think its valuation is greatly excessive," he said. "I think that's excessive for a company whose growth is highly questionable."

The bottom line is that today Cisco illustrates how messy and enigmatic investing has become. Whether you invest in funds or stocks and whether you're looking for growth or a bargain, Cisco seems like a 'tweener -- far from the sure thing it seemed not long ago.

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