You can say what you want about Cisco Systems, but I have to take off my hat to Chairman, CEO and President, Mr. John Chambers. He's done a heck of a job.

While flying home about 15 years ago, I met a young man who said that Cisco Systems, CSCO, was the best in the business at what they did. Well I didn't know or understand very much about that, but I did know their sales and earnings were growing at a triple digit clip and their stock was hot, hot, hot. No company can grow that fast forever, and in my book, Stocks, Strategies & Common Sense, I questioned what would happen to CSCO's stock price when its growth tapered off and what would its sustainable growth level become.

Although its growth slowed from triple digits rates, CSCO continued to grow at a blistering pace throughout the 1990's. It became a tech giant, its stock price soared and it became a bellwether for tech stocks. Mr. John Chambers became a celebrity and the darling of CNBC. Unfortunately, CSCO was hit by the tech wreck of 2000 just like the other tech giants, and Mr. Chambers failed to see it coming. He continued to forecast 30-50% growth rates long after his customer's business had crashed. He lost credibility with me. See my essays of May 10, 2002 and July 19, 2002.

When Mr. Chambers finally saw the light, he immediately went into action, dramatically cutting costs. He wrote down billions of dollars of inventory, reduced staff by the thousands, shutdown facilities and cut his own salary to one dollar a year. Of course, CSCO's sales, earnings and stock price plunged, but he saved the company and ultimately returned it to profitability. Nevertheless, analysts wrote off CSCO as a growth company. VectorVest did not.

An all-weekly graph displays the rise and fall of CSCO's price since June 1995. By clearing the lower portion of the graph and displaying EPS in its place, you could see how CSCO's earnings hit a low point of minus four cents per share in February 2002 and have been rising ever since. A display of GRT shows how its forecasted earnings growth rate fell from its former lofty levels to negative territory in the Summer of 2001; then returned to 20%/yr. within a year. CSCO reported its most recent financial results last Tuesday. In the quarter ending December 31st, y-o-y sales were up 27% to $8.44 billion and earnings rose 41% to $1.92 billion or $0.31 per share. Although, these are not the super growth rates of the glory days, they're not bad for a multi-billion dollar company.

Mr. Chambers always was a visionary and strategic thinker: looking for new technologies, buying small, innovative companies and seeking ways to grow his businesses. He bought Scientific Atlanta, his largest acquisition, for $6.9 billion last year, and on January 4th CSCO announced the purchase of IronPort Systems, Inc., a leading provider of internet security appliances. Just today, CSCO said it plans to acquire Five Across Inc., a social networking company. Now Mr. Chambers is his old ebullient self again, speaking of new opportunities and an upbeat outlook. Cisco Rides Again.