Haim wrote:
AS, any credible analysis why CSCO can not trade in single digits like LU ? after all similar business environment.
Yes, the business environment is what it is. However, one could look at the balance sheets for the two to hypothesize about some things. That doesn't mean Cisco the 'stock' couldn't trade wherever it trades just as Lucent the 'stock' has, but what about Cisco the 'company' when compared to Lucent the 'company'? I'm not trying to 'defend' Cisco, but certainly wouldn't lop it in the same balance sheet pile as Lucent.
I would just interject here that Cisco has no debt. $0 debt. (Ditto for Microsoft and JDS Uniphase has 42X more cash than debt.) Cisco also has $4.7 Billion in cash and short term instruments on the balance sheet. Yes, this is down from previous quarters if we take a look:
Q2 2000 $3,999
Q3 2000 $4,849
Q4 2000 $5,525
Q1 2001 $6,391
Q2 2001 $4,782
Cisco doesn't need that cash to fund its working capital needs. Rather, it provides a cushion in a softening economy. Remember - they have no debt.
Lucent has cash, yes. Cash and short term instruments total $3.8 Billion. However, Lucent has debt. Long term debt alone on the last balance sheet nearly equals their cash pile and weighs in $3.1 Billion. Lucent has 5 quarters of flat to declining revenue. Lucent has 4 quarters of EPS that look like this:
December 2000 = $.34
March 2000 = $.18
June 2000 = $.00
September 2000 = (-$.02)
December 2001 = (-$.47)
If you look at the balance sheet performance of Lucent since its history as a public company, it has not been good - ever. At least when compared to Cisco. Does that mean that Cisco is suddenly going to mismanage the balance sheet and an economic softening going to derail them to the point that they become another Lucent? Who knows, but judging from the financial position on the balance sheet as it stands today, I don't think we can compare the two. That doesn't mean sentiment for the direction of the stock won't take it to single digits, but I just wanted to point the cash/debt scenarios out at both companies.
BB |
