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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 72.11

-0.3%

Nov 5 3:59 PM EST

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To: TobagoJack who wrote (62113)	10/23/2002 1:40:15 PM
From: Stock Farmer	Read Replies (1) of 77397

Hi Jay, Yup, I recall the post. [EDIT: I see you and your PC are reunited] And over the long term I agree with you. Makers of boxes without particular magic have had a habit of waxing and waning. Huawei itself is not a threat to Cisco. The emergence of Huawei is a threat. Not the instance, but the instantiation. And the threat is not to Cisco. Just to shareholders. 2.5 B$ in revenue last year with 500 M$ in profits by merely selling also-ran technology at cut-rate prices into Cisco's biggest high-growth market? Hmmm.. That 2.5 B$ of cut-rate revenue represents 4 B$ worth of full price revenue, or 2.5 B$ worth of margin contribution or $0.30/share in opportunity cost. More than Cisco earns in a quarter. Unlike competition won against Juniper, which comes with Marketing, channel development and R&D cost overheads, competition lost to knock-off substitutes into existing channels translates straight to the bottom line. Huwaie is something folks on this thread should be watching. David and Goliath, new economy style. Wasn't so long ago Cisco was the little David facing the prior goliaths. Not impossible for the worm to turn. Even so, I don't mark them as a severe threat to the existence of Cisco. Primarily because if Cisco didn't exist then Huawei wouldn't exist either and couldn't afford to develop channels etc. Cisco will still be around; LU and NT are still around. For those of us who are neither fans nor employees, it's a matter of the price of a slice. John

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