Cisco Systems, Inc. (CSCO) Message Board

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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 78.03

+0.8%

Nov 14 9:30 AM EST

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To: Dave who wrote (51451)	4/16/2001 11:42:53 AM
From: Stock Farmer	Read Replies (1) of 77399

Dave - inventory stuff confusing, yes, but vigorous discussion initiated by Feschbach Desciple around January. See Message 15302491 by Monty and around this time. I'm not a professional accountant, so maybe GVTucker or Monty want to chime in here. As for why tax benefit of stock option? Well, 1.6 B$ was net earnings, and 1.6 B$ was from tax benefit of stock options. We can estimate about 50 M stock options exercised every quarter (200m/y from 2000 10K). Then take 1.6 B$ tax benefit from 50M options gives $32/share benefit. Kinda hard to get that kind of benefit when the stock is only trading at $18, isn't it? So we could see a B$ hole appear in OCF just based on the current stock price... thus depressing the stock price, thus deepening the hole... and so on. I've got CSCO modelled as three businesses: selling internet gear, investment banking, and selling slices of themselves. The last two are hurting worse than the first, and accounted for half of the cash flow in Q2. Until this is fully recognized by the market, well I don't think we'll have put the bottom in. IMHO. John.

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