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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 78.030.0%10:36 AM EST
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To: Rob S. who wrote (49823)3/11/2001 6:17:26 PM
From: RetiredNow  Read Replies (1) of 77400
 
I agree with some of what you say. For example, I think that Chambers, along with the media in general, used their industry clout to help pump up the Internet hype to such an extreme that the many Enterprise and Service Provider companies started spending with abandon to build out their infrastructures. They did this, as you say, without regard to the economics of the deal. The truth is they built it and the people are coming to use it, but the problem is that the profits aren't materializing because of the supply and demand balances of bandwidth right now.

So what's the problem? The hype created a classic bullwhip effect. Through their expert salesmanship, Chambers and others pumped companies into buying in the last year or two, much of what they will need over the next several years as well. That means that the next several years will see companies working off the glut they purchased. I believe the demand is still there. But everyone just got ahead of themselves and we are paying the price in the stock market right now. So the real question is how long will this bullwhip effect last? We've been experiencing it for almost a year now, so I'm hoping another year will do it. But it could be as much as two years before these companies start really ramping up spending again. Then we'll see the stocks of the Cisco's of the world start performing admirably again.
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