PALO ALTO, Calif. (CNN/Money) -
Consider the short list of corporate America's recent Hall of Shame: Worldcom, Enron, Adelphia, Tyco, Global Crossing, Citigroup's Salomon Smith Barney unit.
What's missing from that list? Well, for starters, Cisco Systems (CSCO: up $0.23 to $13.30, Research, Estimates), the Silicon Valley heavyweight that's lost more market value -- roughly $400 billion -- than any of the others. And come to think of it, you won't find any Silicon Valley companies high up on the list of shameful shenanigans.
How could that be? Sillycon Valley, the font of funny numbers, doesn't have the feds crawling all over the place, and doesn't have perp walking CEOs commanding national headlines. Could it be that the prosecutors aren't all that able here? Or could there be more to the story?
The Untouchables?
Let's start with Cisco. It's arguably the one company the media and other Johnny-come-lately naysayers would most like to see take a hit. CEO John Chambers, a Fortune cover boy at the height of the bubble, did as much as anyone to sell the hype of the Internet economy.
And he personally profited, to the tune of the $239 million in stock he sold, according to a more recent Fortune cover story. New York Times columnist Paul Krugman published a recent screed suggesting Chambers had lost his moral authority because of the stock's drop. Earlier this year, New York Post columnist Christopher Byron tried and more or less failed to smear Cisco executives by suggesting they profited unduly from their investments in private partnerships that did business with Cisco.
Throughout, the company retains a $100-billion market capitalization, making it the 21st largest U.S.-listed company.
Of course, the dirt may yet fly on Cisco, but the fact remains that it's a real company, with real cash and other investments on its balance sheet ($21.5 billion of it) and no debt. It also sells real products, and it's the undisputed leader in its markets. As long as corporations need networks, Cisco will be in a position to sell them routers and switches.
Take note, this shouldn't be construed as a buy recommendation. Who knows if the company, minus its cash, is worth four times its fiscal 2002 sales of about $18.9 billion, especially considering that its growth has become miniscule. But this exercise does explain why you haven't seen screaming headlines about Cisco.
| |
Recently by Adam Lashinsky
| |
| | |
| | |
|
The same is true of the rest of the valley. Yahoo!, Intel, Oracle and the like all are down tremendously, and that's undoubtedly got investors steamed. But you hear barely a peep about allegations of book-cooking at any of these giants, or, for that matter, any of the smaller valley firms.
I have two hunches about why this is the case. First, the smaller dot.com disasters never pretended to be anything more than they were: nifty ideas that weren't generating a whiff of profits, and usually, no promises to the contrary. It's tough to blame a company that failed after it told you that success wasn't even likely.
The other reason shenanigans aren't huge in the valley is that we've seen this picture before, albeit on a smaller scale. Oracle suffered an accounting scandal in 1991 that nearly killed it. Informix, an Oracle competitor, never quite recovered from its scandal and eventually was sold off to IBM. Perhaps Valley accountants and lawyers have been careful to make sure the fun and games with numbers were played out in a visible and legal way because of their past disasters.
Or maybe, the media and government officials just aren't trying hard enough here because no one's paying any attention to tech anymore.
Adam Lashinsky is a senior writer for Fortune magazine. Send e-mail to Adam at lashinskysbottomline@yahoo.com.
Sign up to receive The Bottom Line by e-mail.
|
