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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 7 4:00 PM EST

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To: Haim R. Branisteanu who wrote (57891)	8/18/2000 11:54:25 PM
From: Tulvio Durand	Read Replies (1) of 99985

... The whole earning growth came from gains realized from investments and "other income" which amounted to $541 million out of $1,363 pretax earnings. ... Haim, am catching up on my reading after vacation. I share some of the concern in realizing that a substantial portion of reported earnings are not native to Cisco's business. But they are earnings nevertheless. It must be that their investments are paying off handsomely, and CSCO owners are reaping returns as surrogate owners of those investments. Nothing wrong with that. Sort of like owning a well performing mutual fund without paying the taxes. Speculating on those investments, I bet a substantial portion is venture capital funding of high tech development by nascent companies. When these companies do their IPOs, CSCO reaps the payoff in the increased valuation. If their tech stuff is really good, then Cisco buys them out. -- A pretty good strategy either way, and sure beats the returns one gets from spending same money on R&D. Thanks for the analysis. Tulvio

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