Upon leaving the army after a half-century of service, General Douglas MacArthur remarked how "old soldiers never die, they just fade away."

That certainly would seem to be the fate of Cisco Systems (CSCO), the profitable, multi-national, large-cap networking behemoth which, despite announcing second-quarter net sales of more than $10 billion a 6% year-over-year increase, notched a new yearly low on Nasdaq (NDAQ) yesterday.

In a market which had previously favored many large-cap tech stocks like Amazon (AMZN), Qualcomm (QCOM) and Apple (AAPL), shares of Cisco stand out as an undisputed laggard. The stock now trades near the same level it did back toward the end of 1998, down over the past 3 months, 6 months, 1 year, 3 years, 5 years and decade. It's rather unpleasant to watch, like seeing your childhood football idol now walking with a cane.

It's hard to imagine today, but there was a time when Cisco was the world's hottest stock. Twelve years ago it would have been included in nearly every discussion about the U.S. economy and most certainly every mention of the U.S. stock market. It boasted a market capitalization of over $300 billion; today, it's just $100 billion.

In 1999, BusinessWeek called CEO John Chamber "the Internet's No. 1 salesman" in a cover story about Cisco's plan to "rule the internet." Another writer gushed that "a bet on Cisco is a bet on the pure unadulterated growth of the Internet," concluding that "no matter how you cut it, you've got to own Cisco." And many investors did.

Cisco's Shrinking Piece of the Pie

Source: Bloomberg, Rosewood Research

The internet did take off as Chambers predicted, with the number of worldwide users growing 444% over the past ten years. But Cisco, and its importance in the markets, did not -- despite net sales more than doubling over the same period.

Back in 2000, Cisco accounted for over 15% of the Nasdaq-100 index, tradeable today via shares of PowerShares Nasdaq 100 (QQQQ) . Over the years that percentage has steadily fallen -- to 10% in 2001, 8% in 2002, 5% in 2005, 4% in 2010 and finally 3.7% today.

The point is that the internet did grow, as did Cisco's sales and earnings. But a company and its stock are two different things, and after more than a decade, the company's valuation and price action have stagnated.

When long-held positions rally, I advocate staying out of their way. But when they sputter, one shouldn't hesitate to cut them loose and move on.

When Cisco and other former leading companies like Motorola (MSI) and Nokia (NOK) mature or fail to innovate, they become like one of General MacArthur's old soliders: sentimentally respected, but no longer influential. And they certainly aren't the must-own stocks they once were back when Cisco's promise seemed like a pipedream. It wasn't. That future did arrive. But the market, always forward looking, has moved its attention to newer, faster-growing enterprises, leaving Cisco not to die, but simply to fade away. Let it.

Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC.