Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Kashish King who wrote (33273)	4/2/2000 4:16:00 AM
From: Uncle Frank	Respond to of 77400

>> The markets have turned into a Vegas-style casino and that is driving demand for stocks with little or no value. The stocks that have some value (like CSCO at 15 billion annual revenues) are being valued at 500 billion based on nothing more than empty statements about old valuation models being invalid. That bogus rationale is used regardless of where the stock is so the rationale is worthless. They just keep parroting the same old line no matter what the stock does. You've left out are the crashes of the Tulip market in 1620, the stock market in 1929, and comparitive returns for T-Bills <gg>. The last few years have been a bad period for value investing, Rod, and I don't expect it to change for the next few due to productivity gains related to technological innovation and macro demographic induced liquidity. Make the same series of posts in 2005 and they'll have much more validity and immediacy. uf

To: Kashish King who wrote (33273)	4/2/2000 9:57:00 AM
From: John Malloy	Read Replies (1) \| Respond to of 77400

<<It's going to be increasingly difficult to grow the current 15 billion dollar revenue stream for a variety of competitive factors, even though the product volume and breadth may increase. When revenues do flatten out the company will be worth what flat revenue companies of this size are worth: 2 or 3 times revenues in terms of their market capitalization.>> I agree that it's going to be increasingly difficult for Cisco to maintain its past growth. That's why I forecast a drastic slowdown in growth in my previous post, and, along with slowing growth, a drastic drop in the price/book ratio investors will be willing to pay. But even with a drastic slowdown in growth and drop in the price/book ratio, Cisco is not wildly overvalued. It turns out to be fairly priced. You are much too quick to dismiss mathematical models. Build a reasonable model and feed it reasonable forecasts and you get a reasonable value for the stock. Your conclusion that Cisco will eventually be worth two to three times revenues is a mathematical model, although a crude one.