Cisco Systems, Inc. (CSCO) Message Board

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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 73.69

+0.4%

3:59 PM EST

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To: RetiredNow who wrote (57438)	2/11/2002 12:32:35 AM
From: Stock Farmer	Read Replies (1) of 77400

Multi Part Reply Part (last): Conclusion Part 1: Message 17043615 Part 2: Message 17043616 Part 3: Message 17043617 Part 4: Message 17043618 Part 5: Message 17043619 Here is a company entrenched in the buildout of the Internet. Which is gathering revenue at a healthy clip and poised to keep growing this revenue at a reasonable clip. Plus the biggest pile of cash & equivalents of all of its competitors. Plus stealing market share. All good news. As shareholders we have the opportunity to grab one seven billionth of this good news at close to $18. Pretty much as many of these as we can afford. The question at hand is: yes, or no? Which is not easy. Because on the other side of the ledger, this same company that has managed to gather an impressive 7(ish) Billion in retained earnings, has (by your calculations) managed to misplace a similar 7(ish) billion in cash that shareholders have shipped into it from time to time. Nets to not materially different from zero over the life of the company. If this is the ongoing trend, then $18 for a slice of something generating zero isn't precisely the best deal going. So we need to see a change. More than just a change, though. Enough to offset a bit of bow wave. 'Cause the company's facing an expense that could be half of what it's ever earned if it wants to hold dilution to 0% against all of the outstanding stock options, assuming the stock price barely goes anywhere and no more options are issued. More if it does. And less if it tanks. Unfortunately. Also carrying goodwill on the order of the other half of what it's ever earned. Which puts it at the starting gate. Hopefully on a new track. What's the track look like? EPS rate of $0.36 gives us nearly 50 PE... If we factor out the use of inventory and the deferred revenue cookie jar 'cause neither of these can go on forever... well, that's EPS rate closer to $0.24 pushing PE up into the 70's. Well, maybe revenue and earnings are going to pick up and the company's going to be able to really retain its retained earnings. Put it all together and I guess we could hang on and hope for a V-as-in-Very-shaped recovery... that's certainly one possible interpretation. John. P.S. Disclosure: no position. Not short, not long. Nor paid to articulate these views.

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