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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 76.42

+0.4%

10:42 AM EST

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To: The Phoenix who wrote (41206)	10/21/2000 2:59:51 PM
From: Bob Davis	Read Replies (4) of 77400

Phoenix, You are a hard man, Mr. Phoenix... Actually, sector PE's, at 26.6, are lower than the 32.7% growth rate that I used to NPV the earnings stream. Regarding your comment that "I think you're missing the tree's through the forest"...lets take a look at this particular tree. Lets theorize that I were somehow able to buy all of CSCO at its current market price. I'd finance this purchase by borrowing the $403 billion needed to do this at maybe 8% from my friendly neighborhood investment banker. My resulting annual interest expense would be around $32 billion. Although I would then be the sole recipient of CSCO's roughly $4.3 billion in pre-tax income, I'd still have a small $28 billion problem - the difference between what I paid for CSCO and what it produced in pre-tax income. Help me out here - where am I wrong? Bob Davis

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