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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: The Phoenix who wrote (26837)	7/13/1999 11:54:00 AM
From: The Philosopher	Read Replies (2) \| Respond to of 77400

I hold CSCO and like the company, but was interested in your comment: Cisco generated nearly $2B in earnings on only $11B in sales generating 3 times (18%) the profit. That I suspect is the reason for the higher PE. Furthermore this argues that the businesses LU is in - as a whole - are lower margin. The other thing it could mean is that Cisco is vulnerable to lower margin competitors. I don't see that as a present worry, but it is a mid-term concern. If the margin really is a major factor in the high pE, then if the margin drops, the PE drops and the price drops like a rock. Does this worry you? Or do you have some reason to believe that CSCO can maintain its margins for the next several years?

To: The Phoenix who wrote (26837)	7/13/1999 12:02:00 PM
From: LindyBill	Read Replies (2) \| Respond to of 77400

Hey, Gary, how are you doing? I see that Jach is gone, ( no posts on SI since June 8th) and MM must have been disciplined, ( no posts 10 days, and this last post of his is coherent, at least). Since I joined SI, here is the comparative charts: 127.0.0.1:3456/SI/~wsapi/investor/chart?s=csco+lu&pts=60&span=Weeks As you can see, Cisco is up 156% since then, and LU is up 105%. They are both doing terrific, and will continue to. It's too bad we haven't been able to use this thread effectively, I hope things will improve in the future.

To: The Phoenix who wrote (26837)	7/13/1999 1:09:00 PM
From: Mighty Mizzou	Read Replies (2) \| Respond to of 77400

Well if we just look at LU and CSCO only the facts would seem to counter this position. LU earned $2B on $32B in sales and holds a profit margin of 6.2%. Cisco generated nearly $2B in earnings on only $11B in sales generating 3 times (18%) the profit. Checking on this, doesnt sound right. LU has a lot of extraneous factors that could affect the raw numbers. Will get back to you on this. The Pacific Rim is starting to dominate the low margin SOHO market that CSCO wants a part of. Really??? Who ??? Pick up a copy of warehouse.com's network catalog and you'll see a myriad of Pac Rim manufacturers practically giving this stuff away. Hmmmm, $11B in invoices and no products. I said MANUFACTURE, not design and sell, M-A-N-U-F-A-C-T-U-R-E. It can be very tricky to control costs when you outsource. LU and NT will have some success in the enterprise as Cisco has success in the SP's. LU and NT will have more success in the enterprise than CSCO will in SP's. The size of the markets dictate this. Makes A LOT more sense for CSCO to defend it's home turf vigorously than to give a little to get a little. Not only does Cisco support Tag...but they have the only ATM switch that is available with MPLS today. Tag IS CSCO. It's proprietary and nobody's buying. They are WAY behind the game in ATM. MPLS isnt widely supported today so that isnt an important issue yet. We're going to rip out the internet infrastructure and replace it with ATM, we're going to all install ATM NIC's on our desktops and rip our our enterprise routers? It is already happening. AT&T is replacing packet switching with ATM/IP. You know this OG, dont be so naive! Yes, ATM to the desktop is not popular today, but gig ethernet is not living up to it's expectations either. As ASIC's make switches smarter and faster, the likelihood of the demise of the traditional router is a foregone conclusion. This makes the header overhead of ATM less cumbersome and eventually practical for desktop delivery. I DONT expect this to happen within the next 5 years but I do expect it to happen long before it's pure IP end-to-end, if QoS can ever be supported in raw IP.