(FORTUNE Magazine) – Dear John,
Hey, dude! How ya doin'? No, really, are you okay? 'Cause I know you're going through some pretty heavy stuff out there. (Understatement!) Anyway, I need to talk to you about something. I know we spoke on the phone the other night, but it was rushed and I just didn't feel comfortable. I hate to do this in a letter, but, well, you've been so busy meeting with all those analysts and suppliers and employees.
But first I want to show you this picture I found of the two of us. Yup. Those were the days! You and me bombing around your hometown in West Virginia. The times we had were really special. Anyway, let me get to the point. This is really hard for me, John, because as you know I have so much respect for you, but right now I'm hurting pretty bad, so I guess I'll just have to say it.
John, things aren't the same between you and me anymore. Last year you were on top of the world. Cisco was on this great run, and you were talking about how it would last forever. And like a fool I bought it--lock, stock, and router. Now look at us! You're stacking up sandbags to stave off the 100-year flood, and I'm keeping my head down. Trying to avoid the stares, the whispering. (As in, "There goes the guy who wrote, 'No matter how you cut it, you've got to own Cisco.'")
Yes, John, as you well know, I penned that remarkably imperceptive sentence in what today looks to be a remarkably imperceptive story on Cisco (May 15, 2000). My timing couldn't have been less impeccable. Sure, maybe I'm being a little hard on myself. The stock was already down almost 30% from its peak of $82. But of course, that's small consolation for the 70% drop since then! Let's just say I hit as close to the top of the curve as I ever want to again.
As you may also recall, John, in that story I inducted you into the CEO Hall of Fame. It was still early, I acknowledged, but I suggested that you were as sure a bet as Ken Griffey Jr. (who ironically enough is injured right now!). Well, maybe I was a bit premature. After all, the primary stat buttressing my case wasn't RBIs or homers but the fact that you had presided over the creation of more than $541 billion in stockholder value during your first five years as CEO of CSCO. Had to be an all-time record, I wrote.
Now, let's take a look-see. Yes, Cisco's market cap is still up $103 billion during your tenure. On the other hand, you now have the ignominious distinction of presiding over the destruction of $438 billion in shareholder value! (Closing in on a trillion-dollar swing!) I wonder if any other CEO can lay claim to that feat either!
And then there are the layoffs. You've often said how painful it was to pink-slip thousands of folks at Wang earlier in your career. It was something you said you never wanted to do again. So you can't be feeling very good about dinging all those Cisco-ites. "A personal failure" is how you described it to me on the phone the other night. Lesson here, I guess, is never say never.
You told me something else too. "Stick by us," you said. Cisco will be back, and I'll feel warm and cozy about John Chambers and Cisco again. FORTUNE and Street Life will look good by making the right call for the long haul. Well, I don't know, John. I just feel so burned! (Also, as other journos always remind me, I'm a shareholder too!) One thing I do know, John, is that if ever there was a time to earn your Hall of Fame stripes, it is now. To use your own metaphor, CEOs, like the rest of us, are probably best measured not when the waters are running fast and true between the banks but when the levee breaks.
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