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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 78.03

+0.8%

3:59 PM EST

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To: Martin Milani who wrote (25425)	5/11/1999 7:50:00 PM
From: Alok Sinha	Read Replies (5) of 77399

IBM, even after this run-up stil trades at a PE between 30 - 35. So it is absurd to compare it to Cisco whose PE is 80 -120 (depending on what period earnings you are looking at). My take is - companies trading at PEs as high as CSCO are not going to satisfy investors with at 26-27% growth in earnings (even if it means beating estimates). It also seems quite obvious that they were able to better rev. projections through some low margin sales. Look at the action in Dell since its last report. They beat their numbers, sales missed optimistic projections - most analysts went ga ga over the report at the time. PE has been compressed somewhat, but still trades at a PE of 60-80. My take on tomorrow's action: CSCO +4 in the morning , NAS will open +30 or so. (Good time to buy puts on techs, or sell calls ) Market will start fading within an hour (how much depends on the yield on the 30 yr bond) - not that it has anything to do with CSCO, valuations are just too high to be sustained at current level of rates, IMO. CSCO will do well to stay in the plus column by the end of the day. 100 - 105 is definitely possible by the end of the week if NAS corrects 100 points or so. I currently do not have a position, but have been long CSCO for a long time (and been rewarded handsomely, and I do believe it is a great company. I may get back in, not tomorrow but sometime during the summer when the price is about 20 points lower. Regards Alok

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