Copyright (c) 2000 by Michael Finley

For most of the last century, General Motors was the most highly capitalized corporation -- the company with the greatest net stock value. During the 70s that title moved around a bit -- info-giants AT&T and IBM staking the strongest claims to it.

Then, in the 1980s came Microsoft. We marveled that a company that produced, essentially nothing -- software being incorporeal -- became top dog, market-capwise.

Moreover -- and I'll bet a dollar you'll agree -- most of us believed big, mean Microsoft would remain top dog for perpetuity, or longer.

Well, last week another company moved ahead of Microsoft. Even more remarkably, it was a company that three quarters of the country never heard of -- Cisco Systems.

Cisco Systems came into existence in June 1980, when Sandra Lerner and Leonard Bosack, of Stanford's business school and computer science department, respectively, hatched a plan to sell routers -- the hardware and software used to connect different kinds of computer systems. Soon they had connected all the disparate kinds of mainframes, mini-mainframes, and those new toys, the PCs, on the Stanford campus. Without necessarily intending to create a business, they created a whale of a business.

A "cisco" (lower case) was a router made in the San Francisco area. Without ciscos, the LAN revolution could not take place as it did. And without networks, there could be no Internet, as we know it.

So there you have it. Cisco may not have invented the Internet; that resume line belongs to Al Gore. But they contributed the networking guts to the new technology. And that is why they have grown twice as fast as Micosoft for the last 10 years.

During this period, Cisco Systems enjoyed the greatest stock run-up in the history of investment, shooting up from 6 cents a share to $80. Total market cap is in the range of $700 billion -- a single company equaling the gross product of Russia.

This development should be of interest to you, whether or not you invest in dotcoms, and whether or not you are an Internet insider. Because to look at this company, as David Bunnell does in a new book, Making the Cisco Connection: The Story Behind the Real Internet Superpower (John Wiley, $24.95), is to see how new times differ from old times.

But here's the deal. Because Cisco has so much funny (tech-inflated) cash, it can spend outlandish sums to acquire other companies. Last fall Cisco spent $6.9 billion to acquire Cerent, an up and coming company that figured out how to route copper-wire telephony along with the faster fiber-optic stuff. That bloated figure stunned even the tech stock world. Cerent is the sort of startup a more sensible age -- like, two years ago -- would have valued at, oh, $60 million. But to Cisco ("Is that $700 billion in your pocket or are you packing heat?") Systems, $6.9 billion is chump change. Imagine.

Cisco Chief Executive John Chambers says that the company is only just now taking its place at the far end of the food chain. Last year the company bought 18 other companies. This year it expects to buy 20 to 25 of 'em -- succulent young start-ups to provide fresh muscle and know-how to help the mothership maintain its momentum.

What's it mean? It means that much of what you thought was right -- that the big get bigger, that hardware is old hat, and that Microsoft owns the known and foreseeable universe -- is wrong.

And it means that the scale of outlays for the new tech companies so dwarfs the rest of the world market that one-time pampered powerhouses IBM and AT&T look -- sad to put it in this way -- hardworking. Child-killing capitalism turns out to be a giant-killer, too. Everyone dies, guaranteed!

If Microsoft went down, so will Cisco. The day Cisco became number one, its best days were numbered. Already the wagons are in a circle, as newer, better, less encumbered technologies have the company surrounded. Cisco's big competitors are also on a buying spree. Eventually, some small, nervy, privately-held company Cisco won’t be able to buy, will set forth a new standard, or a whole new paradigm for connecting, and hot Cisco will be in hot Crisco.

But just for one day, wouldn't you like a little bit of Cisco's walking-around money?