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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 76.04

-0.3%

Nov 26 3:59 PM EST

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To: Lizzie Tudor who wrote (63255)	3/13/2003 12:14:03 PM
From: Elroy	Read Replies (1) of 77400

Doesn't matter Victor. This thread is in denial. Well you had a really long post a few posts ago about how Cisco has to move their R&D to India or merge with Cisco in order to lower their costs. That's a decent argument if Cisco had any competition and low cost R&D (which is great in software) and low cost manufacturing (which is great in standalone hardware like PCs and cell phones) were recipes fir success in enterprise LANs and WANs. But you didn't respond to the CONTENT of the post where I pointed out that Cisco is a monopoly, and virtually all network purchases today are expansions of existing LANs and WANs, and the enterprise customer (75% of Cisco's business) will purchase from the same vendor that he already has installed his network (usually Cisco). Thus we have no pricing pressure from Chinese low cost providers (or even Dell for that matter). Thus we have no pressure on gross margins. Thus your argument for margin pressure (which drives your whole theory) is wrong. Again, Citibank is not going to install a Huawei 48 port 100 MB switch in their Cisco-based network to save $1000 per switch. Dell confirms this. If Cisco has not pressure of prices to lower their cost structure, their only problem is demand. When the customers want network upgrades or new capabilities (VOIP, WiLAN, whatever) they will pay through the nose to get Cisco gear, not risk putting another vendor in their network to save capital spending dollars. Who's in denial, again? Elroy

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