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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 77.99

-0.2%

3:59 PM EST

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To: Jacob Snyder who wrote (48624)	2/8/2001 11:19:32 PM
From: Wyätt Gwyön	Read Replies (1) of 77400

No, i do not think it is as simple as you put it. if cisco stops growing, it stops getting a growth multiple. that means perhaps go to pe of 40 and still be overpriced, or go to pe of 20 perhaps and be equilibrium except for depression scenario. meanwhile, hot stocks csco wants to buy may still carry 200-500 pe. or not even a pe. check out corv. csco supposedly tried to pay 10 billion before it went pub. this type of purchase will be more expensive, on an apples-to-apples basis, if csco is at 25-40 pe. such hot stocks become too dilutive to purchase. that is why intel does not try to buy high-pe large-caps like brcm, for example. csco may become forced to rely increasingly on in-house r&d. is that tragic? all just my humble opinion.

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