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To: Road Walker who wrote (50009)	5/9/2000 5:33:00 PM
From: Benkea	Respond to of 99985

John: "The key word is mature. There are those that would say 55% YOY revenue growth argues against your point. Is the Internet mature?" I call a company which earns .09 compared to last years .09 pretty mature no matter what kind of financial games they play to show .14 (before one-time charges). One-time charges are NOT one-time when they occur quarter after quarter.

To: Road Walker who wrote (50009)	5/9/2000 6:05:00 PM
From: pater tenebrarum	Read Replies (2) \| Respond to of 99985

John, you do have a point there. and yet, CSCO's valuation discounts a lot. note also that this extreme jump in its p/e is a fairly recent phenomenon, that coincided with the market bubble taking off. i still think this is largely a function of monetary policy which i deem to have been too lax for many years. i think the best comparable historic example are the one-decision stocks of the early '70's, a.k.a. "the nifty fifty". they grew at phenomenal rates, and yet after the peak in '72 they underperformed vs. the general market for well over a decade and it took about 15 years for most of them to regain their '72 peaks. nevertheless the better ones never saw their revenue growth slow down during this period of underperformance. i think the same may well be in store for today's buyers of CSCO stock. the point being that at its peak, years of phenomenal growth were priced into one euphoric moment. i also think that the criticisms regarding its accounting practices can not be dismissed out of hand. the company needs to keep on acquiring other companies at a feverish pace to keep that revenue growth coming. and in the process more and more dilution takes place, as the acquisitions involve staggering amounts of funny money. unfortunately current accounting standards mean that the true costs of these acquisitions remain under wraps. most recently CSCO saw fit to pay 6,1 billion dollars in its own stock for a company that had revenues of 21 million dollars. and that was just the latest in a string of similar deals. it seems to me that this type of dilution will sooner or later have an adverse effect on the stock, regardless of the other issues we touched upon. here is some interesting reading on the multiples and growth rates of the tech behemoths and the assumptions underlying their current valuations (the second post refers specifically to CSCO): csf.colorado.edu csf.colorado.edu regards, hb