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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 78.03

+0.8%

Nov 14 9:30 AM EST

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To: Bob Davis who wrote (23210)	3/1/1999 8:17:00 PM
From: The Phoenix	Read Replies (1) of 77399

Historical revenue stream or projected? Projected relative to what other revenue streams? Earnings versus what other relative rates of return? Point is like this.... If the best rate of return is with company A then why invest in Company B, C, D, E, F, or G? If everyone knows that the best return is with company A - they all invest and thus the value of that company is rewarded with what appears to be an overweighted valuation. BUT, the fact is, Company A not only has better earnings but has a better chance of maintaining that earnings growth due to their positioning the market. Fundamentally, valuation is based upon future earnings POTENTIAL and PERCEPTION that those earnings can be maintained and the RISK involved with taking that chance. Cisco has excellent potential, the perception is that they have great potential, and the risk (relative to other equity investments) is relatively low. OG

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