Well, yes and no. The point of "networking" is to develop a web of connections within one's industry (or within the business world in general). Build a strong enough network, the theory goes, and you'll never
have to go in cold. You may not know someone at every company out there, but if you've got a strong network, you'll get a referral from someone you know who knows someone there.
The worst time to be networking is when you're looking for a new job. (That's not to say you shouldn't do it; it's just a bad time to be starting the process.) The best time to network is when you're not looking. When you've got no hidden, job-seeking agenda in mind, you're psychologically in a less desperate and more genuinely curious place. And the people you talk to will be less skeptical or cynical, because they'll see that you're not just using them to get a job. The "networking" becomes less transactional and more social, and the connections developed are more likely to be mutually interesting and beneficial.
That's not to say that reaching out to someone within a company is a bad thing, even when applying for a job. Indeed, it's better to have anyone on the inside than to drop a resume completely blind. And it's better to get the inside scoop on a company that's made you an offer than to accept the offer without diligence. Ideally, though, you don't want your first contact with someone inside the company to be simultaneous to your application to work there.
Much more can be said about "networking" -- how to do it, when to do it, ethical considerations about it, social qualms about it, or even whether "networking" is really a less ideal form of some other, presumably more meaningful activity (e.g., making friends on an agenda-free basis). But I'll leave those considerations for a different discussion.