CSCO - where's the bottom?!?!? Bear Thread Message Board

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Technology Stocks : CSCO - where's the bottom?!?!? Bear Thread

CSCO 71.07

-1.4%

Nov 6 3:59 PM EST

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To: Monty Lenard who wrote (19)	11/11/2000 4:18:30 PM
From: bambs	Read Replies (3) of 253

Do you think we will have a Nasdaq close below 3000 and CSCO under $50 next week? I think the clearing out of assets by AT&T and BTY to pay debt is a sign of things to come. I think the bond market is out of control and the equity market will be pounded as result. AT&T is close to getting junk bond status. The telco sector is in really bad shape. Not just the CLEC's either. I watched that program on BBC World. "Bubble Trouble" really quite interesting. Said at the height of the Real Estate bubble in Japan the total value of the land in Japan was seven times the value of the US. Crazy! People actually tried to justify it at the time too. There was an analyst from LEH on the program said that he was one of the few to really start questioning the valuations over there. Talked about how real earnings from operations had only grown by 2% of the decade leading up to the bubble while stock prices had gone 5 times or more. Gains from investments was a big driver of the earnings then too. Excess liquidity in the financial markets drove the markets to those valuations just like we is here today. Companies there all borrowed vast somes of money using their rapidly inflating assets as security. Interest rates were lowered to 2.5% and the boom got completely out of control. Everyone thought that money was almost "free". In the end profits didn't come and cash dried up. The credit bubble burst with the stock market. I expect that we will see the same thing here. Companies like WCII have can't even make a profit EBITDA and now have to resort to vendor financing from the likes of CSCO in order to keep expanding. Both companies need to keep that revenue growth going or their stocks will be beaten down even more. As this credit problem come to light I expect things to begin to get real ugly real fast. In Japan when the bubble burst major brokerages and banks went bust. I expect we will see the same thing here. I wonder how many people will get hurt in money market funds as they don't realize the potential for bad debt. I think that's why we could see CSCO buy CIEN as rumored. Picking up CIEN before the purchase method gets forced on them must seem attractive. Too bad they will over pay by about 20 billion. But, it's only csco stock. It's not like as if csco shares are really worth $50. Or the company is market cap is as good as cash. Bambs

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