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Technology Stocks : Tekelec
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To: lml who wrote (1452)4/5/2000 12:14:00 PM
From: BWAC  Read Replies (1) of 1648
 
I sure we don't want to go here:

But could CSCO ever earn enough to really justify their market capitalization? Or how far away is a sane valuation for some of these companies with 10 Million in Sales and a market capitalization of 33 Billion?

In CSCO's case, It's a great company, a fine one. But it's market cap is 500 Billion. That amount of 'money' or investment in essence is getting its owners a 'real' return in earnings of 2.6 Billion. Sounds great. But put another way that's .5%

CSCO could earn 12 TIMES that amount for their shareholders if they just converted that 500 Billion to cash and invested it in a CD.

I know. I know. Investors get a return from capital gains, the rate CSCO grows earnings, etc. I also know it is all about supply and demand. Demand for CSCO is overstripping supply. So price goes up. But does that really mean it is a good buy? Kinda makes a case for never investing in mutual funds? Who knows?

But just think .5%? Eventually it all does come back to earnings. Eventually. Oneday. Someday.
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