Cisco ascends to most valuable company

Networking giant Cisco Systems surpassed Microsoft today as the most valuable company in the world.

Cisco's shares today inched up 69 cents to close at $80.06, giving the network equipment maker a market value of $555.4 billion. Microsoft today closed with a value of $541.6 billion, its stock falling $7.63 to $104.06, as speculation mounted that the giant software maker would settle its antitrust suit with the Department of Justice.

"We're pleased about this, but the market fluctuates and things could change," said Cisco chief financial officer Larry Carter, whose company has been public for 10 years.

"The question I get from investors is: 'are the best 10 years ahead or behind us?'" Carter said in an interview. "Our job continues to be focused on our customers and be successful. I think it will be exciting given where the Internet is taking us. It's a tremendous opportunity."

Cisco makes high-speed networking equipment used in the Internet backbone, where most Net information travels. It also sells networking gear to companies to speed up corporate networks.

Last Friday, some media outlets reported that Cisco beat Microsoft in value based on "diluted shares," which includes employees' stock options that have not been exercised and are not available to the general public. Cisco was worth $579.1 billion to Microsoft's $578.2 billion using diluted shares to make the calculation. But under basic shares, Cisco remained about $30 billion behind Microsoft, closing with a value of $550.7 billion compared to Microsoft's $581.3 billion.

Now the basic share calculation puts Cisco in the lead.

Cisco's move to the top spot underscores the importance of technology in today's business market. Microsoft had previously stripped away General Electric's No. 1 ranking in 1998.

Last month, Cisco leapfrogged over General Electric as the second-most-valuable company, after investors reacted favorably to the high-flying networking firm's strong quarterly earnings.