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

To: bambs who wrote (34244)	4/20/2000 5:34:00 PM
From: The Phoenix	Respond to of 77400

Bambs, I have no problem with a discussion but it requires that you listen and at least integrate the commentary along the way. Gary suggested $92 and a P/E of 30 in 2005. I said if you give it a 30 PE but went further to suggest that at that kind of growth it's not only probable, but likely, the PE would be twice or three times that. To get a P/E of 40 with a market cap of $795 bil you need earnings of $19.88 bil in 2005. To match the current Profit Margin of 16.9% CSCO needs to have revenue of $117.6 bil in 2005. Now to go from $16 bill to $117 bil. Buy 2005 CSCO needs 50% growth of revenue and earnings every year! And it will still be over valued in 2005 and trading with a P/E of 40. Gee...I think this is what I said already.. except with those kind of growth rates do you really believe CSCO will have a PE of only 40? Re: INTC.. whom you've brought up and I responded to but you have chosen to ignore.. is in a different business... last I checked. The PC business is growing in the teens right now. The Networking business - as I have demonstrated multiple times - is project to grow in excess of 30% (not by me but by analysts) through to 2005. Review the CAGR's I've posted. Y2K upgrades everywhere. HUH?????? Where have you been??? There were lockdowns galore. Banner year nothing! It was made more difficult due to uncertainty. Tax breaks or not... which I never heard of. DELL... OK, now DELL another PC play (The PC space is not the networking space).. If you go back to the DELL thread - about 6 quarters ago you'll see posts from me suggesting it was overpriced. The box market number was up and the writing was on the wall. You clearly don't understand the networking business since you've completely (in every post) ignored the market issues where Cisco competes. You can't look at the tech market as a whole - look at the sectors, look at their growth rates, look to see who is best positioned to execute successfully, project market shares/revenues and with it valuations. It's really simple when you do the work. 1. .com crazy is taking a beating. Investors aren't going to be driving money into .com companies anymore. The .com businesses that where buying CSCO routers and services last year will by buying less this year. Less start up .coms as well. The .com market is in a consolidation phase. SOme .com's will go belly up while others will take on that growth. So, to assume that there are too many .com's directly translates into less business for CSCO is a leap of faith. That said the amount of networking equipment employed by a .com is mice nuts in the grand scheme of things. Do you have any data suggesting that this consolidation in the .com space will impact CSCO's business or is this a guess. Even a couple of articles from industry luminaries will suffice. 2. Companies like IBM and Quest are partnering to build massive web servers to host sites for all sizes of businesses. The increase in off site web services will impact on CSCO's sales. HUH??? You really don't understand at all - do you. Q, IBM, INTC, EXDS are all using CSCO equipment. This dynamic is a goooood thing. It only helps to increase net traffic - exactly what CSCO wants... furthermore it doesn't reduce the requirement for enterprise infrastructure - just the support and maintenance of the server farms. Hint: Cisco isn't a PC or a server company. They are an infrastructure company. If enterprises farm out their web hosting and application hosting then there will be MORE traffic on the net. That's gooooooood! 3. Competition is increasing every day and margins will suffer. We went through this. Competition in the enterprise is DECREASING! COMS, CS, LU, and soon NT all gone. CSCO is the predator in the service provider space. And please don't bring up low end hubs, switches, and routers.. these aren't a big contribution to the revenue stream. 4. Interest rates will impact on companies capital expenditures...I think many companies will find themselves putting off the big CSCO order they were thinking of getting. Nope. I already addressed this. Service Providers (and enterprises) know that if they don't build in the infrastructure to improve productivity thier competitors will. They have no choice. Furthermore this is a domestic issue and as the Pac Rim begins to return to prosperity this will be a huge benefit to all the telcom eq. vendors. Cisco is well positioned in the pac rim as they were adding facilities and staff when the asian crisis hit.. just as everyone else was running. What an unbelievalby good move by CSCO. Bambs, here's the point... CSCO growth continues to accelerate and for that reason it deserves it's valuation. And, until that growth rates slows I'll continue to be an investor. You, me, nobody can predict when this ship will slow but I'm not going to call it a day when it's still accelerating... and to do so is really quite foolish. One day many years from now you'll be right and I'll be on a beach in the Caymans. Og 5. Finally, 50% growth year over year til 2005 will not happen!!! Here's some revenue growth rates to consider. INTC 12% IBM 7% MSFT 22%. Most techs will grow at 35% next year. The bigger you get the harder it gets to grow.