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

To: Mehitabel who wrote (28076)	9/2/1999 9:50:00 AM
From: Zoltan!	Read Replies (1) \| Respond to of 77397

September 02, 1999 Outlook: BankBoston picks Cisco, IBM and Microsoft NEW YORK. 05:00 AM EDT—BankBoston is sticking with the big guns. Chief investment officer Ned Riley, Jr. still thinks a technology portfolio should contain industry leaders with a proven track record. For our weekly series on the best buys in the tech sector, he picks Cisco Systems (nasdaq: CSCO), International Business Machines (nyse: IBM) and Microsoft (nasdaq: MSFT). Cisco Systems (nasdaq: CSCO) is unquestionably one of the greatest beneficiaries of the explosive growth of the Internet. The leading supplier of products that link local and wide area networks (LANs and WANs), Cisco controls about 85% of the global market for routers and switches. After an inconspicuous public offering in 1990, the company took off with the World Wide Web. And what a takeoff: If you had invested in Cisco's IPO a decade ago, you could have pocketed a gain of more than 40,000% by selling your stocks at today's market value. But BankBoston's Riley isn't recommending a sell. He thinks investors should place their money in the industry leaders that will shape the future of the Internet--and that includes Cisco. Through its slew of acquisitions, Cisco is building a portfolio of intellectual assets that will most likely pay off handsomely in the future. Cisco isn't chasing market share; instead, its acquisitions have been focused on companies with cutting-edge technology that would have been expensive and time-consuming to develop in-house. Riley freely admits that Cisco isn't cheap--not by a long shot. Floating on the Internet mania, Cisco has held up remarkably well even after the glitter started to wear off of other Internet stocks. At almost 70 times next year's expected earnings, the maker of networking equipment to direct Internet traffic is one of the most richly valued hardware companies in the market. Nonetheless, investors who are focused on growth--and that includes Riley--must be willing to stomach some high valuations in return for the prospect of a swelling bottom line. Riley points out that companies at the peak of their valuation cycle tend to pay off in the long term because the growth in earnings per share tends to be strong enough to offset a shrinking P/E ratio. In the case of Cisco, most analysts peg this growth rate at 28% for next year and close to 30% on average over the next five years. forbes.com Hugh Johnson of First Albany was on Bloomberg today and picked Cisco as his buy noting that tech stocks have high valuations and that Cisco is at the top of those but that's for a stock that will be at the heart of the greatest growth in technology for the next 3, 5 and 10 years.