Nothing Amiss in the House of Tech

The mood at the Credit Suisse First Boston conference was upbeat: Cisco's got high hopes; Cypress Semi's stock has gained. So what's with Microsoft's Maffei?
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SCOTTSDALE, Ariz. -- A screen on the tube Tuesday afternoon screamed "TECH PRESSURE" as the


swooned. You wouldn't have known it from the mood at the plush annual get-together of

Credit Suisse First Boston's

technology troupe. Indeed, a better way to describe the state of tech at the start of the last pre-Y2K month would be SNAFU: Situation Normal, All Fired Up.

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From highflying chipmakers to ever-confident networking-equipment leaders, nothing's amiss in the house of tech. At least, if there were, you wouldn't hear it here. Heck, nobody even dwells anymore on the fact that Credit Suisse First Boston is the third home of the '90s for the merry band of bankers and analysts led by Silicon Valley's Frank Quattrone. A raging market for initial public offerings has a way of quieting such quaint tales of past bad blood. Indeed, the most influential tech investors still troop to this conference each year -- no matter whose name is on the podiums at the sumptuous Phoenician resort -- to get the year-end scoop on the companies they own or are considering buying.

Much of what they're hearing is predictably good.

Donald Listwin, the executive vice president of


(CSCO) - Get Report

responsible for the fastest-growing portion of the company's business (service providers and consumer lines), detailed how Cisco will grow its revenue to $50 billion to $60 billion in coming years from a forecasted $17 billion in its current year ending in July. "This is not a financial forecast," he added quickly, noting that the figures are, however, the objectives his boss expects. His boss is CEO John Chambers, the man many Cisco watchers believe Listwin is being groomed to replace one day.

Cisco's continued hypergrowth involves a handful of what-ifs. To simplify matters, Listwin defined the company's total market opportunity as a hair under $150 billion, assuming the continued convergence of voice, data and video networks. All Cisco asks is 30% to 40% of that, arriving at the aforementioned targets. Incidentally, displaying an admirable example of walking the walk -- a Cisco hallmark -- Listwin's presentations are available for all to see at his

Cisco Web site. Judge for yourself if the darling of Wall Street and Silicon Valley alike can hit its goals.

Despite reading his libertarian screeds in various publications for several years, I'd never heard a financial presentation by T.J. Rodgers, CEO of

Cypress Semiconductor

(CY) - Get Report

. The CEO's profile always has been more prominent than his stock price, as Cypress' commodity static random-access memory chips endured the vicissitudes of memory-chip pricing and global recession. Well, for once, Rodgers and Cypress are talking a good game together. The stock, at 27 1/4, nearly has tripled in the last year.

Rodgers explained that when the chip recession hit in 1996, Cypress was reliant on commodity products. Since then -- and after another whammy from the Asian flu -- it has developed a slew of higher-end chips, such as a component that powers a


(MSFT) - Get Report

mouse that's much smaller than a competing chip by competitor and top customer



. Commodity chips now represent about half of Cypress' revenue, Rodgers claims. More, the company's revenue growth rate is greater than the overall semiconductor industry's for the first time since the years following its 1984 start-up.

At least as good a wordsmith as he is an engineer, Rodgers even has a slogan to sum up the times: "Life is good," he closed.

A notable exception was a decidedly un-fired-up Greg Maffei, the chief financial officer of Microsoft known for his acerbic wit, snarky jabs at the competition and aw-shucks protestations that Wall Street is overvaluing his employer. Maffei, occupying something of a spot of honor as keynote breakfast speaker on the conference's first day, gave a rather colorless presentation, including a demo of Microsoft's struggling


product. Perhaps an omen came when the CFO asked for a show of hands of WebTV users. Only a few hands in an audience full of technophiles went up.

Maffei reviewed Microsoft's myriad strategic partnerships and areas of R&D spending. But he made no blatant putdowns of competitors. Rather, he noted that

America Online


has done a "helluva job" building its service, allowing only that AOL's "horrific" churn offered Microsoft's

MSN Internet

service an opportunity. Nor did he lecture adoring portfolio managers, as he often does, on the still-yawning gap between Microsoft's price-to-earnings multiples and its growth rate. The bigger the difference, the greater the risk goes the traditional thinking.

It's tough to say what role Microsoft's antitrust woes played in Maffei's relative gloominess because he didn't mention them. But don't fret for Microsoft or CFO Maffei. He did note that Microsoft's investment portfolio has soared to more than $18 billion from $13.6 billion at the end of the third quarter. He cited as reasons big jumps recently in shares of


(T) - Get Report




, in which Microsoft owns large positions.

And lest one thinks Microsoft has given up hope on the future of the PC, think again. "We do not see the post-PC era," said Maffei. "Quite the opposite. We see the PC-plus era." He added that Microsoft believes the advent of information devices will drive PC growth rather than diminish it as PCs remain central to Web usage.

Adam Lashinsky's column appears Mondays, Wednesdays and Fridays. 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. Lashinsky writes a column for Fortune called the Wired Investor, and is a frequent commentator on public radio's Marketplace program. He welcomes your feedback at

Edie Yates assisted with the reporting of this column.