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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 71.08

+0.1%

Nov 7 9:30 AM EST

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To: Tony Viola who wrote (24605)	4/25/1999 5:28:00 AM
From: Dragonfly	Read Replies (5) of 77397

Chambers is right too. CSCO is overpriced at this level. It does not reflect current company reality and it is due to general internet hype. And cisco is percieved as the next Microsoft. But there's a big difference between Cisco and Microsoft: Microsoft makes a %50 margin on its sales, CSCO actually has to manufacture goods for its customers and so its margins will never be as rich. So, I believe CSCO is where it is for the wrong reasons, it should be at a 30 or 40 multiple. That being said, it isn't overpriced because the growth we will see in the next 3 years (ok, lets say 6 to CYA) will be astronomical. We are just hitting a major inflection point in the communications industry. (Notice Intel, the Great Inflection Point Detector is moving into this arena, having Barrett delcaring an inflection point.) So, it will turn out that the growth rate will exceed the unrealistic (using the old model) expectations... as the new model for communications comes into play. Cisco is well positioned to use its leverage to extend its product line into all segments of this business offering end to end solutions for corporate customers who wish to provide communications services to consumers. Cisco may even move into providing hardwar directly to the consumers. But, the "golden convergence" of communications is about to happen- deregulation has progressed enough, the old dinosaurs are still moving too slow and when it pops its going to be like the boom of a very large sailboat heading directly downwind-- don't be standing in the wrong place or you go overboard! Cisco is in the right place. Dragonfly

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