Cisco's stock to plunge by nearly 10 percent

When Chambers becomes cautious about the economic recovery, investors react -- as they did Thursday, causing Cisco's stock to plunge by nearly 10 percent.

Chambers gave a fairly rosy quarterly report for the networking giant: The company had a $1.9 billion profit for its fourth quarter, a 79 percent increase over the same period a year earlier. Earnings were 33 cents a share, or 43 cents a share excluding certain charges. For fiscal year 2010, Cisco had sales of $40 billion, an 11 percent increase from the previous year.

"The reason the stock has fallen is more because of John Chambers' tone than anything else," Wu said.

Cisco's revenue came in a bit under analysts' expectations -- the company reported $10.84 billion in quarterly sales, just under the $10.88 billion estimate of analysts -- and its forecast for the quarter of 18 to 20 percent was conservative. But, Wu said, "those weren't really material. What people are concerned about is tone."