John, I agree with everything you said, but I'll one up you. Not only will Cisco probably use a good bit of that inventory they are about to write off, but they will be completely honest about the GM benefit they are getting. It will get completely legal treatment and be there for all the analysts to digest. But guess what? At that point, nobody will care. All they will see is earnings ratcheting up and GM % going up and they will claim Cisco is back to its old self, because that's what people want to see. Then of course, since I'm a realist and have already placed my bets, I will benefit from these shenanigans. What blows me away about most accountants is that they see the shenanigans and know they are legal, so there's nothing they can do about it, but they refuse to benefit from it. Once you realize that with financial knowledge you have a distinct advantage of the lay person, you should use that advantage to make yourself money. For instance, I predicted the big bath, not because I'm brilliant but because I used to be a CPA, so I know numbers. Anybody who knows numbers could have guessed the same thing. Then I acted on it. I sold some shares at $20.5 and bought back a lot more than I sold, at $16.5. Now I've made money on those shares on the way back up. Classic case of using your noggin to make money. So use it this time. Cisco now has a cookie jar to dip into in the future, they'd be crazy not to use it and you'd be crazy to think that the stock won't benefit from it, because the average person won't or doesn't know how to look deep enough to see where the incremental GM% is coming from.
Your favorite oxymoronical, optimistic cynic,
mindmeld |
