What can a Cisco investor do? Wait, and hope the stock stops dropping. The stock, now in a bad downtrend, dropped again this week both before and after Cisco lowered its long-term growth forecast at its analyst day on Thursday. The comes after Cisco's last quarterly conference call, in which it missed the quarter badly and lowered short-term forward guidance.

Investors had hoped they would see better news on Cisco's analyst day on Thursday. They didn't get it, and the stock is down another 10% this week. While Cisco management tried to sooth longer term strategy fears over the threat of more open Software Defined Networking (SDN) technology encroaching on Cisco's turf, it also ratcheted down its long-term growth outlook, to 3-5% compound sales growth, down from a prior 5-7%.

Cisco officials reiterated prior financial guidance for the second fiscal quarter of 2014 (ending December) and all of fiscal 2014 and it maintained its operating margin outlook in the high 20s(%).

Investors can crunch the numbers and look for hope, but the bottom line is that Cisco has a lot of work to do. It's going to have to manage a huge transition in the business, away from proprietary hardware platforms and toward open-source and Software Defined Networks (SDN), which means that customers will increasingly be calling for interoperable, open networking platforms -- that don't necessarily carry the Cisco IOS (Internetwork Operating System). Case and point, the recent action we pointed out with Extreme. Extreme bought Enterasys at an incredibly low multiple -- .5 times sales.

Cisco's got a price/sales ratio of 2.25. Yes, Cisco is still throwing off a ton of cash -- $13 billion in the last twelve months -- and its P/E of 10 is cheap. But that's not what investors are worried about. They are worried about the trend, which is lower sales growth, lower margins, lowered expectations, and a growing threat from the big shift to SDN networking, which does not play to Cisco's strengths.

Cisco CEO John Chambers addressed the “SDN” issue yesterday, saying “you will see us navigate through those [issues] very effectively.” Bottom line? Cisco management's soothing words were not enough, as the numbers loomed large. Cisco's shares stair-stepped down throughout the week.

Analysts following Cisco confirmed this feeling of gloom, even though some meekly issued notes said that with a big drop in the stock, a buying opportunity may be at hand.

“Although analyst meetings often focus on the long term strategy, Cisco needed to discuss nearer term concerns following a poor forecast last month,” wrote Simon Leopold, Managing Director and Communications Analyst with Raymond James, in an investor note this morning. “Although the 3-5 year forecast dropped as do our estimates, we believe Cisco has the right strategy focused on an evolution towards more software centric networks. With the stock trading near 7x ex-cash EPS, we see it as a good investment.”

MKM Managing Director Michael Genovese says he believes Cisco's problems are “company specific,” much of it related to weakness in emerging markets due to the “Snowden effect” (fear of buying Cisco products because of a potential link to the U.S. and therefore the National Security Agency). But he also says that the lowered long-term financial guidance might still be optimistic. He said that Juniper Networks (JNPR), one of Cisco's biggest competitors, has recently been doing better in the router market.

“If anything, we think it [Cisco] could have lowered the revenue target a bit more,” wrote Genovese.

In the end, Cisco management did not seem to be able to erase doubts from the analyst of industry and financial analysts, and the market took note.