Cisco ( CSCO) CEO John Chambers continues to point skyward, but Wall Street's eyes are increasingly glued to that fast-approaching cliff.

Near the Lows
Cisco keeps sliding

Tech's most revered CEO spent two hours Monday retelling his company's glorious story, the one in which Cisco enters a market as the underdog and inevitably comes to dominate it. It's a great story, and Chambers loves to tell it. But investors? Well, they just aren't lapping it up with the same old gusto.

Cisco shares fell $2.69, or 5.5%, to $45.81 Monday amid increasing pessimism that the company's annual growth can continue at the promised 50% to 60%. Chambers made his comments as the company opened its two-day analyst conference in San Jose.

Shiny Happy People

Chambers stuck with the company's bold guidance , and in some ways can be excused for his optimism. He's never managed Cisco in anything but the wildest of growth periods. And while that shiny history informs his outlook, some investors say Cisco is racing blindly into a hailstorm of equipment-spending cutbacks and telco bankruptcies as telecom-industry capital spending suffers the long-overdue slowdown.

How can Cisco not see what Wall Street sees all too clearly? And how can Cisco not even have a whiff of the bad brew surrounding it?

One reason: It's all guesswork. As good as the data Cisco may have gathered from its customers and sales forces, those numbers are largely based on customers' equipment wishlists, which have yet to be funded, says Paul O'Neil, a buy-side analyst with Knight Bain Seath & Holbrook, a pension management firm that recently sold its Cisco shares.

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"What Chambers is saying, in his mind, could be accurate, but the comments are based on old data," says O'Neil. "I don't think John Chambers knows anything beyond the first quarter of 2001 , because I don't think their customers know."

The spending budgets for service providers and office data equipment buyers, which in good times are predictable, are now in flux. Sanford Bernstein equipment analyst Paul Sagawa was one of the first on Wall Street to point to the traditional disconnect between engineers making the buying decisions and the accountants who can't dredge up the funding.

And with the big customers such as AT&T ( T), WorldCom ( WCOM) and others grappling with much larger issues such as restructurings, debtloads and free-falling stock prices, budgets are probably being reconfigured on a daily basis, says O'Neil.

Given the uncertainty, pointing to the sky is inspiring less confidence these days among investors.