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Technology Stocks : Cascade Communications (CSCC)
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To: Lyle Abramowitz who wrote (2030)2/1/1997 12:40:00 PM
From: Keith Cross   of 3743
 
Lyle;

The investment CSCO made in CSCC would be considered Venture Capital. This "seed $" was provided quite some time prior to CSCC going public. Upon CSCC IPO, CSCO received shares which were carried on CSCOs books under lines such as "Marketable securities". Generally, these marketable securities remain on the books at their original cost (i.e. original value of the CSCO investment. This eliminates the fluctuation in price (for stocks) and the potentially inaccurate appraised valuation (for real-estate, etc.) Upon the sale of the securities, the difference (profit or loss) will appear in "Other Income", or in some other one-time line on the income statement. These "Marketable Securites" are doumented somewhere (I don't know exactly where) within all of the information that publicly traded stocks must disclose.

Some long-term investors such as Warren Buffet make use of "cost basis vs. market value" as part of their decision process for buying a stock. (For more on this, see The Warren Buffet Way by Robert Hagstrom Published by John Wiley & Sons.)

Also - when considering the potential customer base for CSCC, don't forget the IOCs (e.g.; T, MCIC, WCOM). A short time (Dec 96?) ago, CSCC announced that T had agreed to purchase $50M in product.

Regards
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