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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 73.42

-2.4%

Jan 20 3:59 PM EST

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To: Lizzie Tudor who wrote (65689)	7/1/2004 7:03:42 PM
From: RetiredNow	of 77400

Ebay is achieving stock price growth primarily through revenues growth, which makes sense because they aren't a mature company. Amazon is achieving stock price growth through becoming more profitable. They just recently turned their first profit and they are steadily improving. Cisco is a mature company and is already a lean, mean machine. Their gross margin is already the highest in the industry and their net margin is just plain huge for a manufacturing company. So they can't squeeze their business model much more. But what they can do to keep margins high is to continue to offshore to cut down on expensive Silicon Valley workers, while retaining the best engineers onshore to do the design work on their new, breakthrough products. IT offshoring would be an easy win for Cisco. I am seeing this with many of my current clients. So given the above, for Cisco, the stock price growth is going to come from increasing revenue growth through their advanced technologies, as well as increasing EPS faster than revenue growth by repurchasing outstanding shares. They could also slow down on the options giveaways to help in that respect.

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