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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 71.43

-0.9%

2:59 PM EST

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To: RetiredNow who wrote (52030)	4/23/2001 9:58:17 AM
From: Wyätt Gwyön	Read Replies (1) of 77397

mindmeld, I also agree with you that if we are looking for "truth" and appropriate accounting, we would wish they wouldn't play these games. fair 'nuff... But the bottom line is they are doing it this way and the bottom line is that it will benefit their margins and income down the road. All you have to do is realize it and you can profit as the stock moves up. this is where we part company. you recognize on an intellectual level the absurdity of writing off components and then using them at an artificially discounted price to boost margins (IMHO, the absurdity lies not in the co. using such components, but in investors deeming the resultant inflated margins as representative of the economic reality of the co divorced from actual cash flows); that is, it is simply an accounting game all 'round, and has nothing to do with the intrinsic value of the co (as evinced by the cash flow, where the 2.5 billion dollar debit does not disappear). and yet you seem to cling to the notion that this very gambit will cause the stock to go up. the only way that makes sense to me is if there are enough buyers who are too stupid to realize the abovementioned absurdity. i won't say that cannot happen, since there were obviously enough buyers inspired enough to bid the co. up to 600 billion dollars last year. and many other companies that had far less intrinsic value than cisco--some being, in fact, worthless from an equity perspective--got bid up to multibillion-dollar valuations. so i won't say it cannot happen again. i personally just would not bet on it. all the above just my humble opinion.

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