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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 78.90

+1.1%

10:38 AM EST

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To: Eric who wrote (52471)	5/8/2001 1:50:18 PM
From: Stock Farmer	Read Replies (1) of 77399

Hi Eric - I admire your optimism. But you know it's not shared :) We just came through a bubble. Everyone knows that. What premium did the bubble induce? Maybe 2x actual value? Ok, that sets max bubble-free valuation on CSCO in 2000 of around $40. But back then there was line of sight to growth, earnings going up from a line that was higher than todays, climate healthy, snatching up tasty kibble companies, aggressively growing >60% YoY... Fast forward to today. One of these things is not like the other. Oops... So how can it be worth even $39 (3x13) by YE 2001 unless all of these factors return? And of all that I don't see returning shortly is the free-wheeling capital budgets of the IT organizations CSCO serves. Cripes, almost every company is talking overcapacity, restructuring, even layoffs. That's not an environment in which IT managers get to increase their budget. Or even get to keep the same one as they had last year! Until CSCO's customers emerge from their world of hurt, I can't fathom 3x optimism. Sorry. John.

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