As I look at Cisco's earnings over the years, and also its stock price, a few things stick out. Starting with 95-96, when it had 59% sequential annual earnings growth, followed by 48%,25%, and most recently 29%. Next two years are estimated to be 36%, and 29%. So in the face of clearly slowing earnings growth, what has the PE done? Defying gravity, it has gone from about 42 to 185, all in the face of less growth. Add the fact that they have a lot of dead end revenue streams, and it adds up to a big bubble. JDSU numbers at least better, with increasing growth (45%,42%,111%, and estimated next year at 113%. Fiber optics are definitely a better sector than whatever Cisco is in.)I don't know if its earnings growth is enough, or with other high fliers like NTAP or BRCM. Momentum has played a huge role in these run ups. I hope its not a lesson too late learnt.
Regards,
Steads
Sure hope the US Dollar and Gold stay where they are. |
