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Strategies & Market Trends : Sharck Soup

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To: velociraptor_ who wrote (16652)	4/17/2001 7:12:43 PM
From: Mike M	of 37746

Now that estimate is way down to about 23 cents, and the sharply reduced share price of 16 is 70 times earnings. Also consider that the 23-cent estimate for 2002 is the same amount Cisco earned in 1997. How much is growth of that sort worth? You know the thing that bothers me about that first article is that this kind of logic suggests there never is a time to snap up shares at a bargain. It is my experience that precisely this kind of write-off plants the seed for the next big move. Not necessarily tomorrow but someday (relatively soon) down the road...To suggest that CSCO is overvalued using such logic("how much is growth of that sort worth") may be something of a stretch. After all, the stock is only trading at a 40% premium of what it was in 1997...and though the bottom line growth has regressed, top line growth is a multiple of 1997...This suggests that, once inventory is under control and business conditions pick up the bottom line could expand quickly. If his argument is that conditions cannot improve, then, fine...make that case. But he hasn't made it. In fact it is a simplistic argument at best. Not at all compelling.

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