Cisco passes Microsoft as most valuable company

After a week-long see-saw battle of which company is the most valuable on the

planet, Cisco appears to have gained a decisive lead as it passed Microsoft. On

Monday, as Microsoft’s stock market value dropped $40 billion to $541 billion,

Cisco rose by $55 billion to $555.4 billion.

Market analysts said the short reign of Microsoft as the world’s most

valuable company shows investors are putting a greater value on Cisco’s

control of the Internet hardware infrastructure than on Microsoft operating

system software. Just last week, Cisco became only the second company to break

the half-trillion dollar value barrier. Microsoft did the same a few months ago.

At the time, Cisco was still trailing second place General Electric by more

than $100 billion. By comparison, while GE was founded 108 years ago, Cisco

started in Silicon Valley in 1984 by a husband-and-wife couple. One year ago,

Cisco’s stock was worth less than 200 billion. And less than 2 years ago,

Cisco set the record for the company that reached the $100 billion value in the

shortest amount of time. That record has since been broken by yahoo.

"It just shows how powerful the transformation of the U.S. economy is.

You can have a company that was an IPO a scant 10 years ago that now has the

biggest market cap,'' said Ben Hock, senior investment manager at Houston- based

AIM Capital Management. Microsoft shares took a blow Monday after the U.S.

Justice Department rejected a Microsoft proposal for a settlement. The stock had

risen sharply last week on expectations of a settlement on terms favorable to

Microsoft.

The prospects for Cisco appear almost boundless. With the Internet continuing

to grow by leaps and bounds, and with an incredible portfolio of networking

technologies, many acquired in some 54 corporate leverage buy-outs, Cisco is in

position to move in what ever directions computer networking technology will

evolve. Through it all Cisco has performed in stellar mode. It has beaten Wall

Street earnings forecasts for 10 straight quarters and increased its revenue

growth rate for eight consecutive periods. Sales in the most recent quarter rose

53 percent to $4.35 billion. Profits climbed 49 percent to $906 million.