Babette, No one is disputing the disappointing quarterly performance. However, I still stand by my assessment to your original point and disagree with you that Reed should be the scapegoat for this lackluster performance. Furthermore, sweeping conclusions like, "the only benefit from CS is to sell and offset gains" are equally alarming and tend to be the result of conclusions based on emotion, soundbites, and an overall lack of research.
Informed investors realize that the world's insatiable demand for bandwidth, along with the fat margins that supplying it yields, continue to make this sector the envy of all technology. That is why powerhouse companies like Lucent, Nortel, Compaq, Seimons, and Intel are all tripping over themselves devising strategies to penetrate the networking world.
And because of the time-to-market realities, buy versus invent usually results in acquiring the necessary technology, as Cisco's Mr. Chambers has so astutely proven. CS is still a major networking player and brings to the table great technology, both hardware and software. Whether Mr. Benson manages to turn it around alone or one of the aforementioned outsiders makes a play for CS, an upside to the present trading price is the reward that offsets CS's obvious risks today.
You are correct when you state that this is "the greatest bull market of all times". Technology was in large part responsible for this bull's tireless legs and whether or not you believe it, networking is still a vital part of the technology sector. It wasn't too long ago that every momentum analyst around was recommending CS with a strong buy, in fact many just days before their first pre-announced bad quarter. (Q197) Which goes to show by the time the uninformed analyst/investor thinks they have figured it out, they prove to be "Johnny-come-lately" and end up dead wrong.
These momentum players were not tuned in to the underlying factors which began to affect this sector, not just CS, including the first ever softness in demand (possibly due to Y2K capital spending shifts and longer buying cycles), comoditization/margin squeezes, rapid consolidation, and increased competition. Bay and 3Com have also been impacted, (both have preannounced dismal earnings in their most recent quarter) resulting in three out of the "Big Four" who dominate this sector. So are you suggesting that we too ignore Bay and 3Com in addition to CS? Why not just write off the entire networking sector while were at it?
If none of this makes sense to you, then by all means take your own advice and move on to what may appear to be greener pastures. But for many on this thread who include this vital sector in our technology portfolios, ignoring CS, and COMS and BAY for that matter, is not an option. The world's insatiable demand for bandwidth won't allow it. Only time will tell which strategy proves to be more savvy.
imho,
cm! |
