On this day in economic and financial history…
Duel of the dot-com dominators
Cisco Systems, Inc. (NASDAQ:CSCO) passed Microsoft Corporation (NASDAQ:MSFT) as the world’s largest company on Mar. 25, 2000. The networking specialist edged out the operating-system giant with a market cap of $579.2 billion to Microsoft’s $578.2 billion. Microsoft, which had topped out at a market cap of more than $600 billion at the close of 1999, had been sliding through 2000 in advance of the dot-com bubble’s peak, reached two weeks before the two companies changed places. Microsoft had lost its market-leading position in just a year, and Cisco secured its place among the legendary large public companies — and legendary bubbles — of history.
An Indian Reuters recap of the position switch noted:
Quite possibly, Cisco Systems (NASDAQ:CSCO), the biggest maker of equipment that powers the Internet, will become for the Internet what Microsoft, the biggest software company, was for the personal computer.
Judging by Cisco’s market capitalization, investors seem to believe that Cisco could become the technology standard bearer for Internet hardware. Microsoft, which was founded in 1975 and went public 11 years later, took 24 years to become the company investors value the most, but occupied that spot for less than one year. Analysts have said Cisco, which was founded in 1984 and went public in 1986, will likely remain top dog for much longer and has a shot at becoming the first firm ever to be worth $1 trillion.
This isn’t quite true, as Cisco Systems, Inc. (NASDAQ:CSCO) actually went public in 1990. This glaring flub of the facts also helps underscore the folly of predicting a $1 trillion valuation. At the time, Cisco’s P/E was more than 200, which was nearly triple Microsoft’s inflated 70 P/E. The decade that followed Cisco’s market-cap triumph was not kind to either company — but Microsoft, as you might expect, held up a bit better. From 2000 to 2010, Cisco’s P/E fell nearly 90%, while Microsoft’s fell almost 80%, and for the decade Cisco’s stock posted a miserable loss of nearly 70% to Microsoft’s near-40% haircut.
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The tragedy that shaped a labor movement
A fire broke out at the Triangle Shirtwaist factory in New York City on Mar. 25, 1911, shortly before quitting time. Fire escape exit doors had been barred shut, and the only fire escape collapsed as the panicked workers attempted to flee. The flammable fabrics of the textile factory quickly made for an inferno on the eighth through 10th floors of the 10-story building. Fire trucks that raced to the scene found that their hoses lacked the water pressure to reach the burning upper floors. Within half an hour, nearly 150 workers — mostly young women, many under the age of 18 — had perished, either from the effects of the fire or from fatal attempts to leap to safety.
The tragedy was the worst industrial disaster in New York City history, and it galvanized support for labor movements and unions across the country. Two years earlier, more than 15,000 garment workers had walked out of work, and within two days a massive labor uprising had taken more than 20,000 workers off textile factory floors. Smaller factories quickly capitulated to labor leaders’ demands, but Triangle Shirtwaist’s owners were undaunted — an attitude that would haunt them after the fire. Triangle’s owners formed a manufacturing association with other large textile factories, and within days a brutal crackdown saw police arrests and brutality carried out against the strikers. Harsh legal penalties were levied on arrested strikers that might remind us today of a Stalinist roundup — some judges sentenced people to service in labor camps.
The remaining strikers were undaunted, and the strike continued until early 1910, when most (but not all) of the factories agreed to labor’s demands. Triangle, most notably, had refused to address demands specifically requesting better fire safety features at its factory. In the aftermath of the fire, Triangle and other adamant antilabor factories were forced to address their glaring safety oversights by a rapid push for labor rights in the New York state legislature. Within two years, more than 30 new pro-labor laws had been passed and New York had its own state Department of Labor, which became a model for later New Deal-era labor reforms. The tragedy of Triangle Shirtwaist had at last brought long-overdue reforms to the dangerous factory floors of New York state — and, in time, the rest of the country.
