Cisco and Sysco


Cisco and Sysco are pronounced the same. They are both public companies. Both American companies. But that is about all they have in common.

Cisco is one of the tech giants, famous for powering the invisible parts of the internet, the backbone routers that send the chunks of your email, videos, and cat pictures between Google servers, Netflix servers, and Snapchat servers to your internet provider.

Sysco brings dry goods, paper towels, and plastic straws to most of the restaurants in your neighborhood. If there is a big business as far as opposite to high tech as possible, Sysco just might be that business.

In 2022, Cisco earned $52 billion of revenue, while Sysco earned $73 billion. That year Cisco earned $13 billion in profits, while Sysco’s profits were $12 billion. Moving salt and napkins costs more than moving bits, but that is not a surprise.

What is most surprising comparing Cisco and Sysco is comparing them as investments. If you could time travel back to the 1990s or early 2000s, which company would be the better investment?

Is it obvious which is which? Cisco was founded in 1984 and went public in 1990. That was before the dot-com bubble, but as Cisco powered the internet, it was a dot-com darling stock and you and see that bubble quite clearly in the graph on the left. Amazingly, Cisco has yet to reach its all time high set back in March 2000 when the dot-com bubble burst. Today’s price is 40% below that peak.

Sysco was founded way back in 1969 and went public the following year, in 1970. That was so long ago that the chart on the right above doesn’t show the whole price history. Online stock charts only go back to 1983.

So which was the better historic investment? It depends on the starting year of the investment, but from the mid-1990s onward, the answers, surprisingly, is Sysco. That becomes even more obvious when you notice that the Cisco chart on the left only goes to 80 while the Sysco chart on the right goes to 100. Sysco shares today are $75 vs. $47 for Cisco.

Why is this surprising? Because the news media and investment community keep telling us that the big returns are in investing in tech. Well, here is a key, successful tech company with a big moat.

Juniper Networks is Cisco’s biggest competitor. $5 billion of revenues. Less than 1/10th the size of Cisco. And a horrible investment outside that bubble.

Turns out there are great companies and great investments outside of tech. Sometimes companies that are incredibly boring in terms of innovation, but which solve a pressing issue for tens of thousands of customers who are eager for boring, dependable service.

Innovation is far from everything.

By "Luni"


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