Tony, here's some simple math. Let's say that the average American family earns $40000 ten years from now, and let's say that there are about 80 million such families (right now, the numbers are approximately $32000 and 70 million). That works out to $3200 billion of income.
Now, taking CSCO's revenue growth rate to be 30% over the next ten years, its revenues will be close to $200 billion. That will be 6.25% of the total national income! And that is before we factor in taxes! If we do account for taxes, then we are likely to get closer to 9%. This means two things -- 1. The average American family would be spending 9% of its income on routers and related products, and 2. They have no choice but to buy it all from CSCO.
Now #2 might well become true (and the DOJ might be breathing down CSCO's neck 10 years from now!). But #1 is an incredible number. It just can't happen. You might say that this analysis considers only the US and not the rest of the world. But, at least over the next 10 years, the US will have the lion's share of the market, not just for routers but for almost every conceivable product.
I would like to see some rebuttals to the above. If I have made any major goofs anywhere or overlooked something, I would like to know the details. |
