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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 71.07

-1.4%

3:59 PM EST

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To: Dave who wrote (66606)	11/27/2004 9:01:11 AM
From: Kirk ©	Read Replies (2) of 77397

Rather than PMs to tell me that I don't understand accounting and finance, which I readily admit since my training is in engineering, why not explain to me here why anyone should buy Cisco at $19.23/share? Your PM reply sounded as lame as John Chamber's whining to congress that Warren Buffettt doesn't understand accounting either by forcing him to expense his option entitlements. Did you know that AMAT's CEO Splinter told analysts who wanted a dividend that these dividends tend to become "entitlements?" I think it is clear who is getting the entitlements and doesn't want them to end. I don't know... but I feel I'm in pretty good company when people like Warren Buffet think Cisco is cheating shareholders out of dividends by spending the cash to cover the tracks of options dilution. The FASB seems to think so too. Lets start with Price/Book. Why would a company want to buy back shares at a price/book of 5.15 other than to lower the number of shares outstanding so they can hit their EPS targets? Why not use inflated price/shares to buy companies with better valuation such as AOL did to buy TimeWarner? It seems to me you want to buy back shares when they are cheap and issue more when they are over valued. With competition going after their margins, I find it hard to make a case that Cisco is not over valued, especially when I can (and do) own a company like CACS in the similar market space at $9.22 a share with a price/book of 1.81 with $3.51 a share in cash. Chambers could decide to use his cash to give me a 100% premium for my CACS shares and he'd still be getting a bargain to improve his balance sheet.

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