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

To: GVTucker who wrote (34594)	5/4/2000 9:26:00 AM
From: lawdog	Read Replies (1) \| Respond to of 77399

GV, thank you for your insights. You are 100% correct that I did not calculate receivables turnover or related ratios. I trust that I can leave that to you. But, it appears that your analysis is the one lacking in depth. I'm sure you are aware that this may be a developing problem that has yet to show up in the financials and that financials are historically based. This would be the the tick tick tick variety of problem. The only people who really know the credit worthiness of CSCO customers is CSCO finance and CSCO's auditors. And I doubt they will be "honest and open" if you try to get them to run the credit of their customers. Please tell me if you succeed. Who do you ask about these issues? Investor relations? This is not the kind of problem that will show up in ratio calcs. If it exists it will be precipitated by a recession or an increase in the failure rate of these risky customers. Until then, you can only hold your breath and hope that this is not the ticking time bomb it appears to be. I'll leave the quantitative historically based analysis to you on this. I think you'll find it to be a waste of time until some of these customers begin to fail. There is no long term receivable, and A/R days have declined over the past year. A/R turnover, in this case, is like trying to use a telescope to see bacteria. Let me just make a comment that this is a potential problem. Potential means that it is the kind of thing you should be asking questions about. It does not mean that it is problem or that it will become a problem. Just be aware that the ball is in play. Look for A/R ratios to begin to break down if this becomes a problem. It will be interesting to see what the numbers are in the next report.

To: GVTucker who wrote (34594)	5/4/2000 11:09:00 AM
From: lawdog	Read Replies (1) \| Respond to of 77399

GV, I took your word for it on the A/R #'s, but it seems that you may spoken with too much haste. The simplest financial analysis, quarterly percentage change, is verifying that the vendor financing mentioned in the Forbes article is already impacting CSCO. A/R grew at nearly twice the rate of sales in between the previous 2 qtrs. Looky: 10/30/99 sales = 3914 A/R = 1420 1/29/00 sales = 4350 A/R = 1711 percentage change sales = 11% A/R = 20% Therefore, A/R days are also increasing. A qtr to qtr anomaly? Next week we'll find out. This could be very interesting. BTW, it is possible that vendor financing is included in some other number on the financials. I'll look into it when I have the time. Too busy in the day job right now. Later. BTW, so this is the kind of analysis that you recommend doing to keep bears from getting a bad reputation.