Cisco Systems, Inc. (CSCO) Message Board

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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 78.88

+1.2%

Dec 8 3:59 PM EST

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To: BWAC who wrote (61446)	9/26/2002 4:23:44 PM
From: RetiredNow	Read Replies (1) of 77400

Good point. But what we are concerned with is Free Cash Flows. So it depends on how they accumulate their cash. If it comes from core operating earnings, then great, it will value adding. However, if it comes from stock options exercises, then that's not value adding, rather it's a transfer of wealth from shareholders to Cisco and the employees. Also, remember discounted cash flows account for everything in the future. So all it tells you is what the company's value is calculated to be today based on future cash flows discounted back. So if Cisco accumulates $4 of cash per share but racks up a bunch of debt, sells a bunch of shares, or gives out a bunch of options which get exercised to get that $4 per share in cash, then that is not value adding. Keep that in mind.

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