As the company's spokespeople put it, it would "forever change the internet and its impact on consumers, businesses and government." Wow - strong words indeed.
What investors got, however, was something stunningly-less dramatic.
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Sorry Cisco, but you're not going to blow anybody's mind with your 'breakthrough'. Why? Because Verizon (NYSW:VZ) already did it. In partnership with competing router manufacturer Juniper Networks (NASDAQ:JNPR), NEC Corporation and Finisar (NASDAQ:FNSR), Verizon successfully delivered data at 100G speed using a fiber-optic connection.
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Even putting aside all the competition that Cisco is facing with Juniper before the new router officially launches, the hype is still mostly unmerited. How many $90,000 routers does the telco industry need? Cisco has sold only 5000 of the prior-generation routers over a period of years. Generously assuming the company will be able to sell the same number of the newer routers in one year (which would theoretically be unnecessary if the things can offer far greater capacity), that's still only $450 million in potential sales - and that's a very aggressive possibility.
Not that $450 million is chump change, but considering Cisco posts annual revenue in the $30-$40 billion range, the company is lucky that the market let the stock off the hook with only a flat performance for the day. Not only did the announcement not "forever change the internet", it used up a great deal of investor goodwill by inflating the stock to unjustified levels.
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