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Far more interesting than the jarring velocity of the 2000 crash is that even though Cisco was one of the few surviving companies of the dot-com bust, its stock price has still never regained its 2000 high, despite the twin booms of DSL/cable internet and smartphone adoption in the computer and telecom industries.
Since the stock’s spectacular crash, Cisco’s annual revenue has grown from around $12.5 billion to around $57 billion. Its annual net income has gone from $2.7 billion in 1999 — this flipped to a loss of around $1 billion in 2000 — to north of $13 billion on a 12-month trailing basis.
Notably, the company’s net income overtook its 1999 highs by 2003. Still, the stock spent much of that year trading more than 50% below its bubble-era highs.
And sure, surviving that era was a success in and of itself — remaining a going concern, employing thousands, making money, and even paying dividends are feats many competitors failed to accomplish in the intervening years. And those dividends did, in the end, finally contribute to Cisco surpassing its 2000 closing price in 2021 on an adjusted basis.
Moreover, the internet, in fact, was transformative. And Cisco’s plumbing of servers, VPNs, firewalls, and the like were — and remain — vital support to what’s been built on top.
But for any investors with diamond hands, HODLing strong since 2000, the company’s stock price has not yet ridden out its 24-year trough to regain a turn-of-the-millennium peak.
The banal — and perhaps sanctimonious — lesson here is a reminder that stock indexes usually go up over time while many stocks do not.
But past any moralization is a more subtle truth: Cisco and its investors were mostly right in their thesis — they just bet a little too much.
— Ethan Wolff-Mann
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