So either way, it's a single digit stock.
Yikes! What's the world coming to? Me praising the company's impressive cash flow, and Mindmeld admitting a fair value in single digits? The bottom must surely be near.
Here's how I would compute the missing expenditure, taking your figures so you'll recognize them all. I think it will take a lot of digging to dredge up the actual amounts on a year-by year basis. But we can take a stab at the total.
They started out with assets, bought more, depreciated some along the way and have some left. We can work backwards to find out how much they bought, 'cause we know everything else.
Category M$ ( Source )
Existing PP&E , Net of Depreciation 2,502 (10-Q 2Q'02)
Existing Goodwill & Intangibles, Net 4,550 (10-Q 2Q'02)
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Current Depreciables, Net 7,052 (subtotal)
Add back depreciation 5,270 (mm spreadsheet)
Add back Amortization of Goodwill
& Intangibles 3,131 (mm spreadsheet)
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Total Undepreciated Present Assets 15,453 (subtotal)
Minus Previous Assets (Beg, FY 96) - 137 (FY 95 10-K)
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Necessary Expenditure 15,316 (subtotal)
Minus Expenditure Accounted For - 5,621 (mm spreadsheet)
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Expenditure Not accounted for 9,695 M$
Factor that into the free cash flow calculation and let's see what you get? Ouch.
One of these days Cisco's shareholders could wake up and start asking the board of directors some pretty sharp questions. I wouldn't want to be on the board when that day arises.
As far as "running out of good reasons to dispute the low valuation of this stock"? Better late than never :)
If what we are computing is truly indicative of economic value (and I think so), then we can hardly call the current price "low".
John |
