'Fortune': Cisco Made Many of Its Own Problems
DEBORAH MARCHINI, CNN ANCHOR: Janet Guyon is the editor-at-large at "Fortune" magazine, in their London bureau. She's basically looked at how Cisco got into the pickle it's in. Janet, tell us a little bit more about that.</s>JANET GUYON, "FORTUNE": Deborah, in this week's issue of "Fortune," and also on our Web site, www.fortune.com, we have a bit story on Cisco that really explains how it got into this mess. One of the things that we are saying is that this is not some event that suddenly fell on top of the company. In fact, they made a lot of their own mess. They bet on a segment of the market, the CLECs, which you were talking about earlier, these new telephone companies that now are in trouble. So a lot of their equipment writeup -- that $2.2 billion writeup that they announced yesterday -- about 70 percent of that -- is coming from equipment that they had planned to sell to these new telephone companies that are either going under right now or really are slowing down their spending. And they could have seen that. They could have seen that slowdown last fall, when it really began, but John Chambers continued to be very optimistic about the market, continued to say they will continue to sell equipment to those new telephone companies -- and those sales just have not materialized.</s>MARCHINI: To the extent that this is a mess of Cisco's own making, are the markets making a mistake by generalizing it to a lot of other tech stocks?</s>GUYON: Yes and no. It is true there is a slowdown. It is true that there is a slowdown in the buying of telecom equipment, in part because of the dot-com falloff. So it can be generalized with some of the other companies. But you do have to look at the way in which Cisco has managed itself, and the way they've alienated some of the old-line telephone companies. John Chambers, in 1998, came out and said voice will be free -- it will all go over the Internet protocol network, and that is just not happening. So in some ways, they have alienated a potential customer base. So they don't have those old-line phone companies to fall back on, as Lucent does, as Alcatel does. So some of this is specific to Cisco.</s>MARCHINI: All right, thank you very much, Janet Guyon, "Fortune" magazine. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com