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

To: Brian Malloy who wrote (28012)	8/29/1999 7:16:00 PM
From: Mehitabel	Respond to of 77397

Brian-- thanks for an excellent post. Like you, I remember the 1970's and 80's well, and agree completely. There is no comparison to today, and your post summarizing the differences is very welcome. On the subject of "excessively high PE's", I would like to add that Abby Joseph Cohen has remarked that "average PE's" are very misleading, because they overlook the underlying fundamentals at various periods. When you look more specifically at the periods when PE's were high, they were periods when the fundamentals of the economy were excellent-- low inflation and low interest rates. On the subject of CSCO's "excessively high PE" in particular, I would like to add that CSCO's premium is partly the result of 6 consecutive quarters of accelerating revenue growth, and that this accelerating growth is likely to continue into the forseeable future. We can only "see" through to a year or so ahead. Looking one year ahead, CSCO prospects look terrific. Thanks again for your outstanding remarks. best regards

To: Brian Malloy who wrote (28012)	8/29/1999 8:30:00 PM
From: JRI	Read Replies (2) \| Respond to of 77397

Brian- I, too, am amazed at pundits that like to compare PE's of different eras....not even considering the things that you correctly mention (the current period of low inflation/high productivity)........things have changed remarkably since 1970's (and even 1980's) in most the world (and for multinational companies): The world is on an unstoppable trend toward capitalism, free(r) trade, and more political freedom....this could not be said in the 1970's (or even 1980's)....the jury was still out..........the internet has made it (is making) virtually impossible to control information (the press) like was happening in earlier times...sure, there are a few exceptions (Cuba, N.Korea, Iraq)...but these are countries, for the most part, with small populations....so communism is basically dead.........virtually the entire world plays by/will be forced to play by capitalist/free trade rules (in varying degrees).... The upshot is that, more than ever (but, obviously, far from perfect) American (and multinational) companies are able to sell products globally with less and less government regulation (and taxes)...sure, there will be fits and starts, but the trend here is clear.. China, Russia, India.....my goodness....what huge opportunities.... Not insignificantly, the threat of a a major nuclear war (I'm NOT talking about isolated attacks) worldwide has decreased significantly since 1970's, 80's....of course, other countries (China) will have to be watched in the future, but from a security perspective.....I think most would agree that mass nuclear destruction have decreased significantly...at least for the next decade, two..... The internet? The great profit maximizer...cost reduction...effeciency creator....did not (really) exist in the 1970's, 80's... So I believe that the potential for a continuous, growing profit stream for many world-competitive companies have increased rather significantly in comparison to the 1970's, 80's...given this new world in which we live... Therefore, PE's SHOULD BE allowed to be higher....(because profit growth potential has increased...)...Only a fool would say that the various periods are apples and apples..... And I won't even discuss that the Fed (despite consternation by many) sure seems to understand its role much better than 20 years ago....that, too, has got to be worth something....

To: Brian Malloy who wrote (28012)	8/30/1999 1:06:00 AM
From: hasan syed	Read Replies (1) \| Respond to of 77397

Well said. Allow me to ad that those that want low PEs, can go buy the Auto/Steel (GM, Old bessie, etc)stocks. Jeez, one would assume that the industrial revolution is no longer relevant. This is the technological revolution, and it will have legs into the forseeable future. Regards, Hasan

To: Brian Malloy who wrote (28012)	8/30/1999 2:07:00 AM
From: Richard Nehrboss	Read Replies (3) \| Respond to of 77397

Whew.... I can't believe the response to my post on CSCO's high PE. Note: 1) I'm very long CSCO.. thousands of shares... No one wants this baby to continue to surge as much as I. 2) I noted that CSCO's PE was below 50 for most of the 90's. I didn't mention the 70's or the 80's when, as several of you have noted, the risk free rate was higher. 3) CSCO's earnings growth rate was 42.6% for the last 5 years and is anticipated to be 29.7% for the next five years by over thirty analysts who spend a good deal of their energy on the issue. 4) Ultimately a stock is valued by discounting it's future earnings... Anyone actually go through this little exercise? If so I'd love to see your analysis. 5) Earnings growth rate dropping 30%.. PE increasing by 200-300%. Risk free rate in relative stable range (relative to the first two). 6) Me thinks thou doest protest too much.. 7) I still think it's a great company, Chambers is a great CEO (maybe the best next to Neutron Jack), and am happy with the way they throw off cash like Rod Smith throws of tackles... I'm just questioning whether the greater fools have bid her up too much. Richard

To: Brian Malloy who wrote (28012)	8/30/1999 8:38:00 AM
From: Zoltan!	Respond to of 77397

Another big factor is that demographic juggernaut (slow moving irresistible destructive force), the baby boom generation. That force destroys conventions. In the 1980's they were big net borrowers, starting families and needing housing etc - investing was not an option for most. Today the boomers are investors in a big way - the prime of their investing years - spurred on by the knowledge that Social Security is neither and that investing via the stock market is history's best LT bet. I believe that Cisco's PE expansion has come in some measure through its greater visibility, whether through the corporate advertising or its role as the leading supplier for the internet gold rush. My bet is that Cisco continues to be Cisco (performance) and that the boomers increasingly see Cisco as a premier vehicle for LT investment.