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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 77.80

-0.3%

Nov 17 3:59 PM EST

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To: tepli who wrote (17696)	10/5/1998 2:33:00 PM
From: Jacob Snyder	Read Replies (3) of 77400

re: PE 32 for CSCO is not that bad anymore! The PE is not 32, unless you use imaginary numbers (analyst forward estimates). One of the salutory effects of this downturn is that fewer people will be using those so-often-wrong estimates. Did you see my post comparing 3/97 with today? We are still far above the last trough valuations. As of today: 48 7/16 divided by 1.17 equals a P/E of 41. bottom in 3/97: P/E: 23 P/S: 4.1 P/CF: 19 price decline from high: 34 to 21= 38% 1.17= trailing 12M earnings 30%= long-term EPS growth rate 1.17 X 30= 35 So: if CSCO is given the same valuation it had at the bottom of its last downturn, it would fall to the 25-30 range. Fair valuation given EPS growth expectations is 35. Any other evaluation is wishful thinking and blind love, not logic. In 1997, there was sector risk, but no market or company risk. Today, there is lots of market risk, some sector risk, and still no company risk. That makes it hard to compare 3/97 and today. Still, I think it is fair to say that, overall, today's risks are greater than in 3/97.

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