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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 74.40

-1.4%

Jan 14 3:59 PM EST

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To: Adam Nash who wrote (48796)	2/11/2001 8:17:40 AM
From: Wyätt Gwyön	Read Replies (1) of 77400

One thing about the market--it's always moving the goalposts. There was a time last year where Cisco was over half a trillion, trading at a huge multiple to trailing revenues. And now we're down to 10-point-something times revs. What does it mean? All depends where the goalposts are going next. Just as the market became increasingly accommodative of bloated metrics on the way up, it may become rather restrictive on the way down. Heck, there may even come a time when people care about cash and dividends. I know, it's crazy.... Under those types of conditions, and if Cisco were to slow to the point where long-term growth is on the order of 10-12%, a whole new valuation could take over. In that scenario, lower prices could be justified imho. If you do a FCF analysis, be sure to consider dilution from the ever-rising sharecount. Jubak forgot that when he calculated a $35/49 target for Cisco in 02.

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