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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: Zoltan! who wrote (30854)	1/2/2000 9:28:00 AM
From: Kenneth E. Phillipps	Read Replies (2) of 77400

mindmeld and Zoltan - You make it sound as though Nortel and Lucent should just give up right now because they have no chance of competing with the mighty Cisco. Having enough cash to meet the needs of the business plan is important but it is not necessary to have a large cash surplus. Nortel had enough cash to acquire a 90% market share in OC-192. They also had enough cash to grow the business from $17.6 billion in 1998 to over $22 billion in 1999. You are also making the mistake of comparing the cash flow of a data networking company (Cisco) to the cash flow of telecom equipment companies (Lucent and Nortel). As Lucent and Nortel move into data networking and outsourcing of manufacturing, their cash flow and margins should improve. As Cisco moves into the telecome equipment market, I expect their margins and superior cash flow to decrease. Again, the cash flow of Lucent and Nortel has not prevented either company from having dramatic growth.

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