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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 78.16

+0.2%

Dec 26 9:30 AM EST

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To: Jorj X Mckie who wrote (60703)	8/6/2002 5:16:01 PM
From: RetiredNow	Read Replies (1) of 77400

Hi all, I plugged in the FY02 free cash flow numbers into my discounted FCF valuation model. Here are the results. * at a 10% discount, Cisco's stock has a fair value of $7.48 per share * at a 0% discount, Cisco's stock has a fair value of $22.79 The way to read the 0% discount rate is that Cisco would be fully valued and you could expect no return on your money over the next 30 years if you were to purchase the stock at $22.79. The way to read the 10% discount rate is that is the average annual return you could expect to receive over the next 30 years if you purchase the stock at $7.48. So there you have it. Oh and BTW, the stock buyback is a good start. Although, like John S. pointed out earlier, they are buying back stock with cash they originally received from equity financing from employee exercise of stock options. I'd much rather see a 7 for 1 reverse split and then an initiation of cash dividends. That would better position the company for long term price value appreciation.

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