<THE RULE MAKER PORTFOLIO>

Surfing Cisco

By Matt Richey (TMF Verve)

ALEXANDRIA, VA (June 2, 1999) -- Today, let's continue our exploration of company home pages by taking a look at the world's largest Internet commerce site. At www.cisco.com, Cisco Systems' (Nasdaq: CSCO) website sells more than $28 million in products every day. By comparison, that's more than eight times the daily volume of e-tailing leader Amazon.com. As with yesterday's tour of Microsoft.com, the Cisco site is jam-packed with info. So rather than attempt to cover the breadth of the leading networker's Web offerings, I'm going to focus on what I feel are the top five destinations for an investor interested in learning the basics of Cisco's business.

1. Networking Overview

If you know nothing at all about the networking industry, this is a great place to start. In five short parts, you'll learn the basics of networking technology and how Cisco fits in the picture. The very high-level Industry Background section tells the story of how a 1960s data network built for U.S. national security purposes became our modern collection of graphical Web pages that comprise the Internet. Then, the Networking Technology section explains and provides examples of the most common networking products and lingo, such as hubs, routers, protocols, and switches. The Industry Drivers section discusses key growth factors such as the convergence of voice/video/data and Internet commerce. Under Networking Customers, Cisco introduces its three customer segments: enterprises, service providers, and small/medium businesses. The overview concludes with a somewhat boilerplate listing of market risks, including Y2K and "increased competition." All in all, the overview does a good job of explaining the basics of the industry using plain language that anybody can understand.

2. Internet Business Solutions

"Every fourth person on the Internet is buying something right now."

"The Internet had more users in its first five years than the telephone did in it first thirty."

"This month another 18 million people will go online."

"E-mail already outnumbers regular mail by nearly ten to one."

You'll find these facts and much more on this page, which is part of the online version of the 1998 annual report. Here, you'll learn about the company's initiatives in Internet commerce, customer support, and more. Cisco is a living example of how the Internet is reshaping the world of commerce. With 64% of orders generated over the Web, Cisco's sales organization doesn't have to focus on order taking, but can instead build stronger customer relationships and provide better service. The company expects 80% of fiscal 1999 revenue to be received via the Web. Cisco's Internet commerce not only allows more efficient revenue generation, but also more effective customer support. Since Cisco's customers are typically Web-savvy techies, they have no problem finding answers to their technical questions using the searchable product documentation on the Cisco website. Check out this link to the Service and Support page, and you won't be surprised that 70% of support questions are answered over the Web.

3. Optical Internetworking Overview

This overview of fiber-optic (or simply "fiber") technology provides a foundation for understanding the anticipated convergence of voice, data, and video. In layman terms, this overview explains the technology behind optical networking, the plan for deployment of optical networks, and how Cisco fits into it all. The growing demand for data services (high-speed Internet access, on-demand video, etc.) is rendering inadequate the traditional circuit-switched voice network. Right now, service providers such as cable companies, regional Bell operating companies (RBOCs), and Internet service providers (ISPs) are deploying fiber as a solution to the bandwidth problem, but there's a long way to go. In the meantime, Cisco is working with the service providers to supply equipment and technologies that maximize the use of fiber, while still utilizing the existing legacy network.

4. Integrate Data, Voice, and Video

Sometimes called the "holy grail" of networking, the integration of data, voice, and video is discussed on this page. As you can see on this page, Cisco predicts the following advantages from its packet-cell based infrastructure:

  • Reduced operational costs
  • Higher performance
  • Greater flexibility, integration, and control
  • Faster new application and service deployment

A very cool feature on this page is a link to a demo of voice over IP (Internet protocol) technology. Just call 1-800-800-1180 ext. 68529, and choose option 2.

5. E-Commerce Introduction

In addition to building the backbone of the Internet, Cisco also provides e-commerce solutions for its customers. This page links you to information on Cisco's suite of tools that enable users to manage several business processes online, including product ordering, shipment tracking, and maintenance and warranty monitoring. These products seem to offer a compelling value proposition to businesses trying to get up and running on the Web. For all the details on Cisco's Networking MarketPlace products, check out this link.

I've only scratched the surface of Cisco's site in this report. If you decide to do some exploring on your own, you may also find interesting Cisco's company overview, keynote presentations, and multimedia gallery. If you find something cool, come tell us about it on the Rule Maker Companies message board (linked below) or the Cisco board.

Phil is back tomorrow with a tour of Intel's website.

Have a good evening,

Matt

06/02/99 Close

Stock Change    Bid
AXP   +  1/4    118.44
CHV   +1 9/16    92.00
CSCO  +3 1/16   110.13
EK    -  5/16    66.81
GM    -  5/8     70.06
GPS   -2 3/16    62.63
INTC  +1 1/4     51.94
KO    -  5/8     68.63
MSFT  -  1/16    78.44
PFE   -  1/8    106.25
SGP   +  1/16    45.13
TROW  +  13/32   38.78
XON   +1 1/2     80.25
YHOO  +4 5/16   142.50


                  Day     Month  Year    History
        R-MAKER  +0.48%  -0.93%   3.73%  31.26%
        S&P:     +0.04%  -0.54%   5.65%  30.73%
        NASDAQ:  +0.85%  -1.54%  10.93%  47.16%

Rule Maker Stocks

    Rec'd    #  Security     In At       Now    Change
    2/3/98   48 Microsoft     39.13     78.44   100.43%
   6/23/98   34 Cisco Syst    58.41    110.13    88.54%
    5/1/98   55 Gap Inc.      34.37     62.63    82.21%
    2/3/98   22 Pfizer        82.30    106.25    29.10%
   2/13/98   44 Intel         42.34     51.94    22.68%
    2/6/98   56 T. Rowe Pr    33.67     38.78    15.17%
   5/26/98   18 AmExpress    104.07    118.44    13.81%
   2/17/99   16 Yahoo Inc.   126.31    142.50    12.82%
   2/27/98   27 Coca-Cola     69.11     68.63    -0.70%
   8/21/98   44 Schering-P    47.99     45.13    -5.98%

Foolish Four Stocks

    Rec'd    #  Security     In At     Value    Change
   3/12/98   20 Exxon         64.34     80.25    24.74%
   3/12/98   15 Chevron       83.34     92.00    10.39%
   3/12/98   20 Eastman Ko    63.15     66.81     5.80%
   3/12/98   17 General Mo    72.41     70.06    -3.24%

Rule Maker Stocks

    Rec'd    #  Security     In At     Value    Change
    2/3/98   48 Microsoft   1878.45   3765.00  $1886.55
   6/23/98   34 Cisco Syst  1985.95   3744.25  $1758.30
    5/1/98   55 Gap Inc.    1890.33   3444.38  $1554.05
    2/3/98   22 Pfizer      1810.58   2337.50   $526.92
   2/13/98   44 Intel       1862.83   2285.25   $422.42
    2/6/98   56 T. Rowe Pr  1885.70   2171.75   $286.05
   2/17/99   16 Yahoo Inc.  2020.95   2280.00   $259.05
   5/26/98   18 AmExpress   1873.20   2131.88   $258.68
   2/27/98   27 Coca-Cola   1865.89   1852.88   -$13.02
   8/21/98   44 Schering-P   2111.7   1985.50  -$126.20

Foolish Four Stocks

    Rec'd    #  Security     In At     Value    Change
   3/12/98   20 Exxon       1286.70   1605.00   $318.30
   3/12/98   15 Chevron     1250.14   1380.00   $129.86
   3/12/98   20 Eastman Ko  1262.95   1336.25    $73.30
   3/12/98   17 General Mo  1230.89   1191.06   -$39.83

                              CASH     $70.09
                             TOTAL  $31580.78

Note: The Rule Maker Portfolio began with $20,000 on February 2, 1998, and it adds $2,000 in cash (which is soon invested in stocks) every six months.

Read More Rule Maker Reports