Cisco's Ready to Take a Fall

The yearlong tech-spending slump is about to stamp out one of tech's most cherished fantasies: Cisco's (CSCO Quote) notion that runaway growth is in its DNA.

Through thick and thin, CEO John Chambers has insisted the networking giant will continue to grow 30% to 50% annually over the long term. But don't be surprised if the curtain comes down on the era of smug certainty Tuesday afternoon, when Cisco is due to report fiscal fourth-quarter earnings.

Sure, Cisco will hit its numbers, as it nearly always does: Expect fourth-quarter earnings to match the 2 cent Wall Street consensus. But there's a growing sense on the Street that after a year's worth of writedowns, losses and even layoffs, Chambers may be ready to ratchet down expectations a bit.

No other company, mind you, has demonstrated such unshakeable optimism in the face of adversity. Cisco, as you'll recall, brilliantly built up a $4.1 billion stockpile of inventory on the eve of an industrywide spending collapse, then took a record $2.5 billion charge to reduce the balance-sheet value of those excess parts.

But did Cisco grovel at the feet of investors? No. While the rest of the tech field is awash in apologies and capitulation, Cisco has held firmly to its this-too-will-pass outlook. ...