A few more minutes' work shows us CSCO is continuing apace in its acquisitions. I don't know if my last post was clear enough, but my point was that while CSCO's operating NI was down if you remove the investment gains, the operating income was megatively affected big time by the one-time write-offs associated with some acquisitions...so if what you look at is CSCO's core business, what it really built and sold and what it made on that, biz looks good.
The key, however, is to look at Cisco on an ongoing basis you remove the investment gains because who knows if they'll continue? You want to see what the lookout will be moving forward regardless of the rather undependable <g> stock market's effects. But the 'one time' charges for goodwill amortization and in-process R&D purchases are only one time if CSCO stops acquiring expensive, non-accretive (short term), assets (companies)...which a quick look tells us it's not. Yet, anyway.
Just in the past two months it's announced three more acquisitions, each of which will hit EPS for purchased in-process R&D for a total of about .09 in Q1 (this Q, that hit was only .06). Until we can see CSCO is slowing its acquisitions, or that it's costing less, this expense should be viewed as on-going, and hence a caution, IMO.
So biz is great, but it's costing in the short term to buy all these low-or-no revenue companies to build for the future.
There's nothing wrong with that, but it should be considered when looking at CSCO as an investment.
Cheers,
WUWT |
