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Politics : Ask Michael Burke

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To: Knighty Tin who wrote (64754)	7/17/1999 8:01:00 PM
From: Simba	Read Replies (2) of 132070

Mike: MSFT, INTC, CSCO are aggressive invetors the past few years buying stakes in high flying paper and reporting the investment gains. They are kind of like having mini-CMGI's as additions to their product line. Have you looked at the sales growth or EPS growth based only on what their products generate and not from their venture capital business the past few years ? I guess the analysts rarely talk about real product driven sales growth; or are we buying investment banks in these cases such as a Citigroup ? In particular CSCO keeps buying companies nearly every week and keeps taking write offs on in-process R&D every quarter. These write-offs are viewed as non-recurring in calculating EPS growth when it is actually a recurring expense for CSCO. CSCO does not have to have a recurring R&D expenditure but keep buying companies periodically for R&D but write it all off as non-recurring. Also obtain lower tax rates in the process. All accounting gimmicks and FASB seems to allow this on top of the options accounting gimmicks that Buffet talks about.

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