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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 77.76

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3:17 PM EST

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To: RetiredNow who wrote (54166)	7/27/2001 3:14:18 AM
From: marginnayan	Read Replies (1) of 77400

mindmeld, Thanks for your detailed and very thoughtful response. You answered everything that I asked for. I am also of the opinion that current networking market dynamics will eventually force Cisco to engage in pricing war. But before I jump to conclusions of my own, I need to take into account input from people whom I think are smart. Here is my take: If Cisco indeed were to engage in pricing war, it is obvious it will hurt's its bottom line. This is similar to what is happening in Storage Networking with EMC. So it is at least possible that Cisco for the next 2 or 3 quarters will follow the footsteps of EMC to maintain (or increase) its market share. This time Cisco has real competition from FDRY, JNPR, EXTR, CS. One major negative about competition this time is that stock options of key engineers at these companies have long been vested and most likely exercised (engineers are already rich or somewhat rich). So the key engineers have little or no incentive to work hard. In the worst case they might be even looking for a new startup. At the same time no one knows for sure when will the networking industry resume its normal growth now that Wall Street has finally accepted the reality that even this industry is cyclical. In the past Cisco had competition from losers like BAY, COMS, FORE. In addition to that networking market in the past grew at a very rapid rate. I also think that Cisco will most likely succeed in this endeavor. Cisco still has great products( recent Cisco 74216 core router) aggressive marketing, mountain of cash and prime real estate. I also think that it will not be possible for Cisco to grow at 30 to 50 % (from a larger revenue base) in the future as John Chambers is saying. But John Chambers has done a very good job in guiding down analysts to lower their performance bar for Cisco and once again he will succeed in lowering Cisco's growth rate (10 to 15 %) and if possible still claim a much higher market valuation based on this growth rate. Regards, marginnayan

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