SAN FRANCISCO -- Bunk. A hatchet job. Misguided. Old news.

Such were the (printable) reactions on Wall Street to the


article about


(CSCO) - Get Report


"People were raising the same issues



a year ago," regarding the company's growth-by-acquisition strategy, said Rod Berry, co-manager of the

(RSIFX) - Get Report

RS Information Age fund, which counts Cisco among its "core" holdings. "Everyone knew Cisco had a huge multiple," even before the article appeared, said Berry.

If that is the mindset of many investors, how to explain Cisco's more-than 7% decline Monday? (The stock closed in New York at 62 7/8, down 4 7/8, or 7.2%.) The network equipment giant's woes were the catalyst for a slow but still painful selloff in the

Nasdaq Composite Index

, which lost 147.44, or 3.9%, while the

Nasdaq 100

declined 4.5%. Meanwhile, the


rose 0.2% as the sweltering heat in Manhattan and hesitancy ahead of the

Federal Reserve's

May 16 meeting combined to generate a session that was like

Dog Day Afternoon sans

Al Pacino


Berry, among others, believes the premium multiple ascribed to Cisco is justified, based on the company's dominant market position, predictable earnings stream, long-term growth trends and expansion into new market segments, notably telecom equipment.

Additionally, he's expecting another solid quarterly report from the company on Tuesday.

The consensus estimate is for Cisco to report third-quarter earnings of 13 cents a share, with top-line growth approaching 40% over prior-year results. Profits a penny ahead of consensus -- something Cisco has done for at least 10 consecutive quarters -- is easily attainable, Berry said, suggesting earnings of 15 cents are possible.

"We believe the quarter is going to come in fine and will show sold growth," he said, acknowledging that if Cisco's earnings report has any "hair on it," the stock will get "whacked very hard."

There's little evidence Cisco's earnings will be shaggy, and investors would be forgiven for already feeling as if they've been whacked. After Monday, Cisco shares are 21.5% below their 52-week closing high of 80 1/16, set March 27.

Which brings us back to the question of why the stock reacted so violently to the much-maligned


piece. Without getting into a detailed analysis, the stock would have tanked demonstrably further if people


feared Cisco is a "house of cards," as the story contends.

So that's not it.

It could be investors were reacting to the news of Cisco's $5.7 billion purchase of



. However, the company said the acquisition would have a "neutral" impact on its fiscal 2000 earnings and would be "slightly accretive" (corporate-speak for "positive") in fiscal 2001.

So, it's unlikely the deal was a major contributor to the decline.

Or maybe, as I

mused recently, there's simply a growing concern about the multiples afforded the tech giants that largely escaped the carnage in April, and investors will use any excuse -- regardless of the company's character -- to unload them.

A-ha! (OK, so I'm biased.)

Berry talked about how the issues raised in


were heard a year ago. Well, Cisco's shares have risen more than 130% in the past year while the Comp has climbed 46.5%. Over the same time frame, the

fed funds rate has jumped by 100 basis points and appears to be heading inexorably higher.

That's the rub, and why investors may continue to feel as if they're getting rope burn instead of a soothing massage.

And Another Thing, Redux

Lots of email regarding last week's piece about

Tom Galvin -- which I'm getting to now because I was out Thursday and Friday. (You felt a void, didn't you?)

Several emailers expressed hope the Fed indeed will go into a "wait-and-see" mode after its May -- or perhaps June -- meeting because of the forthcoming presidential election. Perhaps. But recall

Alan Greenspan

already has been reappointed to another four-year term, an act some said was done early to give the central banker a freer hand to act during the election cycle without fear of political retribution.

Also, a few who responded to the article noted the market -- then defined as the Dow -- bottomed around 3250 in April 1994, long before the Fed was done with its rate hikes. While technically true, the Dow struggled to sustain positive headway through much of 1994 and didn't establish a solid bottom until late that year.

Which brings us to a final point -- that the current tightening cycle comes on the heels of one of the greatest bull markets in history, while stocks had been relatively flat (though trending higher) prior to the tightening unleashed in 1994.

The beauty, of course, is you're free to follow whichever school of thought suits your fancy. Whichever ultimately proves correct, it's going to be quite a summer.

Aaron L. Task writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at .