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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 77.42

+4.6%

3:59 PM EST

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To: lkj who wrote (25683)	5/18/1999 3:29:00 PM
From: RetiredNow	Read Replies (1) of 77398

Hey lkj, I can see your point. You are concerned that Cisco's expenses are growing faster than their revenues, while Lucent has the opposite going on. Let me tell you why this makes sense and why this is a good thing for Cisco, not a bad thing. After Lucent was spun off, it had a lot of fat. To this day they are still finding efficiencies in cutting costs. Lucent is a terrific company and has an excellent and large customer service organization. They are equiped to handle growth if they can get the new products out there fast enough to satisfy their existing customers. Cisco on the other hand is a very small company by comparison (if you look at # of employees). Cisco simply MUST expand the company in order to handle the growth it expects to have over the next several years. So what we have seen is a large growth in # of employees over the past year. This is largely why expenses are rising faster than revenues. The way to look at it is that Cisco is investing in their future by investing in people and customer service. Now if revenue growth slows down signigicantly, then maybe we all need to get worried. But right now, there is nothing substantial to worry about.

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