John,
Point taken. No matter how big the cash pile, it can't last forever if it must sustain the company in the face of neverending deterioration. However, I do not particularly subscribe to the neverending part. But one never knows. Besides, no CFO would let a company burn its cash reserve to extinguishment with other options staring the company in the face. CSCO's already frozen acquisitions, which admittedly are mostly financed as stock swaps, but they've also done some symbolic cost cutting. Not to mention the fact that the company is still pretty profitable.
Actually cash+equivs and short term investments, which are nearly as good as cash, were about $4.78 billion at Q2/01's end, down about $1.6 billion from the previous quarter. However, one quarter does not a trend make. Case in point, Cisco's history of closing cash+sti numbers:
q/yr - Total Cash+STI (millions)
q2/01 - $4,782
q1/01 - $6,391
q4/00 - $5,525
q3/00 - $4,653
q2/00 - $3,698
q1/00 - $1,765
q2/99 - $1,851
q1/99 - $2,307
My main point was simply that CSCO has more than enough cash to weather a pretty sizable storm. And as you mentioned no debt and relative financial strength compared to competitors. Question is how much cheaper will it get? I don't claim to know, but I do know that it's cheap enough for me to continue nibbling on.
Good luck!
-John |
