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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 71.75-0.5%Nov 11 3:59 PM EST
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To: FESHBACH_DISCIPLE who wrote (42367)11/6/2000 3:18:19 PM
From: The Phoenix  Read Replies (3) of 77397
 
If someone buys cisco at 400 billion today and takes it private can they ever get their 400 billion dollars back in COLD HARD CASH?

Well since Mucho Mass is entertaining you I guess I'll have to respond... as silly as this is.

First CSCO will generate a $500M monthly dividend.. and yet you still have an asset that is gaining market share in a number of different markets. Let's take a look as just a few.

JNPR has a cap of $60B and have 25% share in the core router market. So CSCO's core router product line should have a cap of at least $100B. Spin that one out...

Since the core router market is about 1/4 the annual revenues for the router space you can spin out the rest of CSCO's router buiness for another $100B.

Then there's the switch business. EXTR has at most 10% share and has a cap of $10B. So let's give CSCO's switch busienss a cap of $75B (and this is very conservative given CSCO's dominance in this space).

Then there's CSCO VoIP busines.. a new business which will be huge! Conservatively this is $10B

Then there's the DSL headend and cable head end products.. this are huge growth markets and CSCO is #2, and #1 respectively ... Call this another $50B.

Optics - CSCO grew this business faster than any other competitor last quarter. NT has a cap of $140B... so let's call CSCO's optical business $50B.

IOS - CSCO's software... easlily $100B by itself... This is the Microsoft of the networking world.

Then there's content switching, caching, CPE, .. who knows.. but more than $20B. Add other $50B for anything I forgot.

So, in total CSCO's parts are worth well more than the current cap.... AND in the meantime you get a $500M/mo. dividend.

Now, you can argue about valuations in the sector all you want but these are the going rates and there is little doubt that CSCO is worth $400B when you consider that they are #1 or #2 in 15 or 20 different markets and are growing share in nearly every one of them.... which means they are growing faster than the market.... Note that I didn't include any premium for premium management and execution.

OG
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