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Technology Stocks : Cisco

CSCO 72.98

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11:51 AM EDT

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To: The Phoenix who wrote (395)	12/8/2000 11:58:25 AM
From: rr_burns	Read Replies (1) of 405

Hi pheonix, Some observations: My "billion US$" in my original post here omitted the cost of the Aironet acquisition. I was just thinking high speed wireless ( Clarity and Radiata) acquisitions. Re: this link you provided cisco.com re Air2Lan : Air2LAN's news site indicates that they went with Wi-LAN's technology a month or so later: air2lan.com So i am unsure what really happened in the Cisco/Air2Lan deal. The cisco/aironet stuff (ieee 802.11b) is being sold by Dell for 499$ (canadian) / base station and 249$ / PC card for connection. ( from a flyer in my local paper today) Assuming a 15% profit margin ( very unlikely - 3.5% is probably closer to the truth in the retail desktop world) Profit (@15%) is 74.85 C$ / base station, and 37 C$ / pc connection. I think the design can take up to 50 pc's per base station, but assume a 15 pc connections per base is typical. So each "site" has a (guessed at) maximum revenue of 629.85 C$ ( 74.85+(15*37)). 1 billion US$ is about 1.54 billion C$. This means 2.5 million sales just to recover the money sunk into all the asssets acquired. If my 3.5% profit margin is closer to the truth then they need to see 10.5 million "site" sales. I am pretty sure that neither is happening in the industry. Yet. (B.T.W the dell rep couldn't answer questions on the hardware when I called, nothing about it on the Dell web site.). From a trade article i read the Aironet 802.11b stuff is generally indoor short range ( 250 meter ) LAN stuff ( still pretty cool though). It is not what one (well, me at least) would expect Cisco to be focussing on for "last mile broadband" connectivity. My main point is there seems to be something wrong with the strategy in play, and it does not take much digging to expose it. When wireless gets hot and the biz press starts looking closely, Cisco may look like it is standing still. In a nutshell: Here is where Cisco is giving away their V-ofdm technology: bwif.org. Revenue from the Clarity/v-ofdm stuff looks very doubtful as a result. The latest Radiata deal is tied up in litigation with Wi-LAN. ?? will the deal close ?? The Aironet stuff needs incredible volume to just break even based on a superficial retail assesment. Even then it is for indoor LAN stuff, not last mile. While those 2 -10 million sales build there is time value to add on to the cost of that billion+. Cisco is so much more than wireless, so the stock is in no jeopardy here. However they are not looking too smart about this arena. One has to wonder when it will change; and if the press gets wind of it first. ...rr

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