Cisco Could Be The Safest Net Play Around

Cisco Systems (CSCO) is a stock that's easy to love. For one thing, its share price has more than quadrupled in the past two years, including a nearly 50% rise so far in 1999. Then there are the company's spectacular sales and earnings gains. For its fiscal fourth quarter, ended July 31, it reported 48% sales growth and 38% earnings growth year over year, excluding certain write-offs. For fiscal 1999, Cisco earned $2.55 billion, or 75 cents a share, on $12 billion in revenues. Next year, analysts expect per-share operating earnings of $1.24, according to First Call Corp., which tracks analysts' estimates.

To state the obvious, the primary appeal of Cisco to investors is its key role in building the infrastructure of the Internet. Lately, to maintain its stellar growth, Cisco has moved into selling telecom equipment in a bid to build what CEO John Chambers calls the "New World Network," which will blend Internet, cable, wireless, and fiber optic networks . For investors reluctant to bet on volatile, money-losing E-commerce stocks such as Amazon.com (AMZN) or Priceline.com (PCLN), Cisco provides a more comfortable way to get involved in the Net game. "I and my clients don't have the nerve to invest in the more volatile Internet plays," says Hugh Johnson, chief investment strategist at First Albany, which holds Cisco in its managed accounts.