Cisco replaces Microsoft as world's most valuable company
REUTERS
SAN FRANCISCO, MARCH 25: Cisco Systems Inc, the biggest maker of equipment that powers the Internet, on Friday closed with a higher stock market value than Microsoft Corp, making it the most valuable company in the world.
Cisco ended the day with a market capitalisation of $ 579.2 billion (around Rs 25,25,312 crore), slightly ahead of Microsoft's $ 578.2 billion (around Rs 25,20,952 crore). Shares of Cisco closed up 1-9/16 at a record 79-3/8 while Microsoft eased 3/16 to 111-11/16. Both stocks trade on the Nasdaq.
Cisco stock has continued to climb steadily through the year, gaining one-third in value. Shares of computer software giant Microsoft -- which topped the market cap chart for a long time -- have languished amid concerns over the government's pending anti-trust case, easing 10 per cent from its peak. Some analysts see Microsoft being hampered by the terms of any upcoming settlement, and are starting to make Cisco their core holding among large capitalisation technology stocks.
Cisco overtaking Microsoft "certainly validates the networked economy that Cisco is revolutionising," said Brian Goodstadt, an analyst with the Standard & Poor Equity Group.
Microsoft, while still a strong generator of corporate profits, generates much of its income from desktop applications and operating systems. While the Internet has boosted demand for Microsoft's products, Cisco, whose routers carry most of the traffic running over the network, is seen as a bigger beneficiary of its growth and its earnings gains have far outpaced Microsoft in recent quarters.
Quite possibly, Cisco Systems, the biggest maker of equipment that powers the Internet, will become for the Internet what Microsoft Corp, the biggest software company, was for the personal computer.
Judging by Cisco's market capitalisation, investors seem to believe that Cisco could become the technology standard bearer for Internet hardware. Microsoft, which was founded in 1975 and went public 11 years later, took 24 years to become the company investors value the most, but occupied that spot for less than one year. Analysts have said Cisco, which was founded in 1984 and went public in 1986, will likely remain top dog for much longer and has a shot at becoming the first firm ever to be worth $1 trillion.
Here's a brief look back at the history of San Jose, Calif.-based Cisco, which makes gear that carries 80 per cent of Internet traffic, and is known for its fast-paced culture, millionaire secretaries and long hours for workers.
It was started by a pair of then-married Stanford professors, Leonard Bosack and Sandra Lerner. Bosack developed technology that would connect his computer lab's network with his wife's in the graduate school of business. The two recognised there was a huge market for these so-called routers, so they quit Stanford, mortgaged their house and started Cisco in 1984. Their first product emerged in 1986.
By 1987, it had 10 employees and had given away its first promotional coffee mug. When the firm was founded in 1984, there were a mere 1,000 host computers on the Internet. It built itself into a powerhouse by acquiring small companies -- more than 45 since its first in 1993 -- and has increased its appetite for buying the technology or engineering talent it needs.
For its fiscal year ended July 31, 1999, Cisco had sales of $ 12.2 billion and 26,140 workers. That's a far cry from the $1.5 million it had in 1987 and the $ 28 million in 1989.
John Morgridge, now the company's chairman and its first president and chief executive, was brought on board in 1988. In 1990, Morgridge fired Lerner, and Bosack quit. They later sold their stock for about $200 million.
John Chambers, who came to Cisco as head of sales fromstints at International Business Machines Corp and Wang, was promoted to president and chief executive from executive vice president in 1995. Don Listwin, considered Cisco's No 2 executive, now holds the EVP post at Cisco.
Other top executives include Gary Daichendt, head of worldwide sales and operations, Judy Estrin, chief technology officer, and Larry Carter, chief financial officer.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.
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