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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 73.42-2.4%Jan 20 3:59 PM EST
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To: Eric who wrote (55942)10/15/2001 8:24:55 PM
From: larry  Read Replies (2) of 77400
 
Eric,

I like your serious approach toward CSCO's valuation. However, the major difference between our opinion is the I growth rate that CSCO can resume in the next 10 years. I will say that CSCO will be lucky if it can grow top line by 15% within the next 10 years which, with decent margins, might prove that CSCO is worth to be a 200 billion company by then. But then the stock price will be around 30 bucks, which is not even more than a double.

I believe that this is actually a better case scenario. Unless that the whole market goes nuts again, or CSCO somehow grows top and bottom line at a rate around 30% for the next 10 years, your target should prove to be well off. The probability of those things happen will probably follow a Poisson distribution, which equals a small chance, or rare event probability distribution. I think that John has given us nice explanation as to why CSCO is not a great long term buy at current level in his string of postings.

I also believe that 99% of the pundits out there underestimated the word 'bubble demand'. The Fed's rate cut and government's stimulus package won't change the fact that the IT consuming has far gone ahead of the curve and it will take years to catch up. And that's my simple reason that the economy will stick in a stagnant stage for a while before it takes up, no matter how you try to stimulate it.

good luck,
larry
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