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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 77.72

-0.6%

10:52 AM EST

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To: The Phoenix who wrote (18485)	10/28/1998 7:06:00 PM
From: Bob Davis	Read Replies (1) of 77400

Gary, I grant you your point on percentage revenue growth, but I was not talking about percentages. What I was trying to say is that it appears that the Company grew in larger increments in prior years than it did in its most recent fiscal year, but this may be more "apparent than real". With regard to my recognition of CSCO's "growth prospects", the "intrinsic value line" (in blue)on the historical chart is based on an earnings growth rate of 30% annually, and the valuation tools were run based on a 25% groth rate, which is the current analyst consensus for the next two years. Analysis are projecting 28.6% annual earnings growth over the next five years - using this growth rate in the valuation tools barely changes the results. I am in no way maligning CSCO - your predictions of its future success appear to be on target. However, based on its cash flows, asset base, and projected earnings growth, it appears that CSCO is currently overvalued in the market. Bob Davis The Napeague Letter napeague.com

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