Cisco 10-K Analysis Snip 3: Assets
This is a bit more detailed and accurate than my previous off-the-cuff response to mindmeld earlier.
Much ado about 18 Billion dollars in Assets. A closer look is warranted. How are they allocated and how well is the company husbanding them, and if the current trends continue what will we as shareholders be proud owners of?
First, allocation. I'm going to make a distinction between "Hard" assets (which could presumably be given to shareholders or be turned into a proxy for cash without jeopardizing the business cycle), and "Soft" assets (which are somehow encumbered so as to be worth less than face value).
Let's go back three years.
2001 2000 1999
Current Hard Assets $11,151 $ 7,579 $ 4,103
Current Liabilities $ 8,096 $ 5,196 $ 3,038
Current Net $ 3,055 $ 2,383 $ 1,065
Investments $10,346 $13,688 $ 7,032
Net Hard Assets $13,401 $16,071 $ 8,097
Soft Assets $21,837 $16,799 $ 6,796
Total $35,238 $32,870 $14,893
And as a percentage:
2001 2000 1999
Current Net Hard 9% 7% 7%
Investments 29% 42% 47%
Net Hard Assets 38% 49% 54%
Soft Assets 62% 51% 46%
Total 100% 100% 100%
And as a per-share value
2001 2000 1999
Shares 7,324 7,138 6,821
Hard Book $/Share $ 1.83 $ 2.25 $ 1.19
Soft Book $/Share $ 2.98 $ 2.35 $ 1.00
Total Book $/Share $ 4.81 $ 4.60 $ 2.18
Several conclusions:
(a) on both an absolute and per-share basis, over the last two years Cisco has managed to accumulate considerable assets. Book value per share has seen a net increase.
(b) on a relative basis however asset quality (hard assets as a % of total) has been declining.
(c) Investments are the single biggest class of asset, and it is wise to look at performance in detail.
U.S. government notes and bonds $4,426 $92 ($1) $ 4,517
State, municipal, and county
government notes and bonds 54 -- -- $ 54
Corporate notes and bonds 7,430 118 (4) $ 7,544
Corporate equity securities 1,993 320 ($784) $ 1,529
Total $13,903 $530 ($789) $ 13,644
Reported as:
Short-term investments $ 2,034
Investments 10,346
Restricted investments 1,264
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Total $13,644
From which we can see that Cisco's performance at investing has been less than stellar. 100% of assets are currently valued at fair market value below cost of acquisition. |
