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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 76.04

-0.3%

3:59 PM EST

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To: The Phoenix who wrote (15176)	7/18/1998 1:47:00 PM
From: Danny Boy	Read Replies (3) of 77400

Did you note during the day how the Lucent folks wanted so desperately to trade across to Cisco but had to continue to pay up. Yeah Lucent is a great company. Five or ten years from now they could dominate the market. I read the Red Herring article and was surprised to see that their appears to be a difference of opinion on the ease of transition from Voice to Data or Data to Voice. Cisco has recently spoken of the difficulty in creating advanced digital systems to handle voice traffic. The article suggested that it was easier to go voice to data than vice versa as Cisco has posited. Now I'm confused. I see it as two standards. One Analog, one Digital. Lucent can install cable and some switching, but routers and software? Data will dominate the new system, so they say; that means Cisco in the drivers seat. The deals with Sprint, Ciena, Worldcom etc. lend credence to this supposition. If Lucent were to buy a networker, which seems pretty sure, can they freeze the market? Will the world wait patiently by for Lucent to define all of the standards that suit only their vision. Are they so cocksure they have what it takes to come to market in quick fashion with proven, reliable data equipment? I have my doubts since they are busy making excuses for why they suddenly now see the Light. Mergers take time to consolidate and manage. Customers need a lot of convincing to switch suppliers. "Voice is what you need! The Data part is a piece of cake! Cisco has the Data Customers. They like what they're getting from Chambers & Co. I'll cut to the chase. Lucent makes 4x Cisco revenue, but only 1/3 EPS. LU Book= $3.84 CSCO=6.09 LU made 431m, CSCO 1.0 BILLION. Profit margin is 2% LU, 13% CSCO. McGinn has a major task ahead if he is to convince share holders that he will one day be ahead of Cisco. He did concede that the market is too big for any one player! Wiggle room when shareholders grouse about dilution and huge options to new employees "lured away from competitors"? No wonder they want to jump ship now before the inevitable battle takes its toll. There is so much to look at here that the fundamentals today are best used to determine what road to travel. Cisco today. Tomorrow...? DGB

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