Levitating Earnings: an Act, or a Fact?
"Cisco Systems, Lucent Technologies, I.B.M. and Hewlett-Packard are just some of the companies now doing this. Many of those buying the gear are small start-ups that lack the cash to buy the equipment outright. The problem, of course, is that such buyers may never have the cash.
Cisco, which said in its latest quarterly report that its financings were rising, acknowledged the danger.
"Although we have programs in place to monitor and mitigate the associated risk," the report said, "there can be no assurance that such programs will alleviate all of our credit risk."
The difficulty for investors in all this, Mr. Olstein said, is that some companies -- Cisco included -- do not specify what portion of their sales are financed. And just how companies account for these sales is often not clear, either. "
CSCO is a great company and I doubt they would purposefully cook the books, but the extent of this problem just may not be completely clear yet. With A/R showing signs of stagnation and "other assets" increasing at such a rapid rate it the danger signs should be clear. The corelation with the financing running out for the .bombs and other questionable customers raises additional questions. Let's see some of that world class analysis eom, og, Zoltan, tp, et al.
nytimes.com |
