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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 77.95+0.2%Dec 5 9:30 AM EST
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To: telecomguy who wrote (30850)1/1/2000 4:20:00 PM
From: RetiredNow  Read Replies (3) of 77400
 
Telecomguy, please specifically address why you believe that Nortel and Lucent can command high valuations and Cisco will not given the fact that Cisco generates positive operating cashflows which is more than the combined operating cashflows of both Lucent and Nortel.

I realize there are many factors that go into valuation, but what it all boils down to in the end is whether these companies make money or not. I would say that Lucent and Nortel shouldn't worry if their poor cashflow situation was a short term phenomenon, but both companies have very spotty cash flow statements as far back as I have looked. Cisco on the other hand has a very clean and upward trending operating cashflow every quarter.

So if we are talking about positioning, from a financial strength standpoint, Cisco is clearly the best positioned and managed company to tackle the challenges that lie ahead. On the other hand, Nortel and Lucent have to worry about profitability as well as maintaining market share in the carrier markets. They are the ones that have the precarious position. From here it is all gravy for Cisco if they are able to penetrate the carrier markets. However, for Nortel and Lucent it is a defensive game.
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