According to the earnings report (http://www.cisco.com/warp/public/146/pressroom/2000/nov00/co...), the number of shares outstanding on a diluted basis increased by roughly 4% from the year-ago period.
So one would think (the PR you cite shows 7.58BB in 01 and 7.288BB in 00). But really the increase was over 8%. The reason you thought it was just 4% was that you just looked at the 1Q01 press release and took the 1Q00 share count from there. But what you need to do is go back to the 1Q00 press release, where the 1Q00 share count is listed as 288 million less than the same count listing in the 1Q01 press release. Are you confused yet? They restated the 1Q00 share count (in the 1Q01 PR) to include the 288 million extra shares due to acquisitions. Net effect: dilluted share count increased from 7BB to 7.58BB, or 8.285%.
Eric, I'm kinda sick and can't say much more now, but I wanted to point out this one issue to you. You were careful enough to look at their 01 PR, but your calculation ended up being off by 100%+. I don't think you're the only one who made this mistake. Frankly, the statements are very complicated, and to figure out much you would need to do a lot of comparing between years. I learned about the above issue in an article at grantsinvestor.com grantsinvestor.com
They go into pretty extensive detail about a lot of the issues you bring up, and suffice it to say that the numbers they come up with are a bit different from yours. Sorry I do not feel up to writing it all down here.
I wrote the following on this board earlier:
Message 14794693
As for the Cisco numbers, if you think there are interesting issues revealed in those measures you cited, please present them
I did some of this presenting on the Cisco thread. I mention it here because people have posted a couple things about the accelerating revenue growth rate trend. My point would be that if you just look at those numbers without looking at anything else, you are not getting a very clear picture of the story. On the most basic level, for example, you would need to divide the rev-growth rate by the increase in share count. Share count increased over 8% in the past year, so logically, you would need to divide the growth rate by 1.08 to see what the growth is on a comparable basis. That is just one nitpicking little thing, of course. But a lot of nits can lead to a different picture. For example, you can look at their declining margins. It's great to have more revenues, but what if earnings don't keep up? Not good, so how to keep up earnings? Well, perhaps you dip into the honey pot of "Other Income", i.e., investment income. And perhaps you want to add a little spice to investment income so you change the weighting of equities (pre-public investments, for example) to conservative bonds. Maybe these things help you in a bull market, but they are not really operating earnings. And do we invest in a company for its operations, or because we think their CEO is the next Peter Lynch?
Here are a couple posts from the CSCO thread:
Cash-flow composition
Message 14642739
Operating cycle
Message 14642549 |
